How Trump-Xi Apec meeting is final chance to prevent a renewed trade war

The US-China trade talks are proceeding amid high tension and a series of tit-for-tat escalations, with a fragile tariff truce set to expire in November. Against this background, US President Donald Trump and his Chinese counterpart Xi Jinping are likely to meet at the Asia-Pacific Economic Cooperation (Apec) summit on October 31-November 1 in South Korea, but whether a significant deal can be reached remains uncertain.

Ahead of their upcoming meeting, Trump has said he would make a deal on “everything” with Xi Jinping, pointing to potential agreements on agriculture and nuclear arsenals. “I think we are going to come out very well, and everyone’s going to be very happy,” Trump added. The high-stakes meeting comes as a delicate trade détente between the economic superpowers nears its expiration on November 10. Trump has also set November 1 as the deadline for the additional 100 per cent tariffs announced earlier this month.

Before the Trump-Xi meeting, the US-China trade talks will resume in Malaysia’s capital, Kuala Lumpur. Chinese Vice Premier He Lifeng, who has been the lead negotiator for his country, will hold talks with US Treasury Secretary Scott Bessent from October 24 to 27, but whether a deal can be reached remains uncertain. If the negotiations fail to produce a more permanent agreement by the November 10 deadline, the original higher tariff rates could be reimposed.

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It may be recalled that in April 2025, the US had imposed 145 per cent tariffs on most goods from China, while China had responded with 125 per cent tariffs. A “90-day truce on tariffs” was reached by these two countries in May 2025, which was a temporary agreement that reduced tariffs between the two countries from their peak levels to allow for further negotiation. This truce was extended by 90 days in August 2025, but a more permanent agreement has not been finalised, and the original high tariffs could be reinstated on November 10, 2025, if talks fail.

The mutual pressure from the US and China over tariffs stems from deep-seated economic, political, and strategic disagreements that have intensified throughout 2025. The US has used tariffs to address what it claims are unfair Chinese trade practices, while China has responded with its own retaliatory measures to defend its interests. While both countries have sought to de-escalate tensions at times, the underlying issues and competing agendas persist.

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In October 2025, China announced new export controls on a range of strategic materials, including expanded restrictions on rare earth elements, superhard materials (like synthetic diamonds), and high-performance lithium battery components. These are crucial for advanced technologies and defence. A significant aspect of the new rules is the extension of jurisdiction to items produced outside of China if they are made with controlled Chinese technology or materials. The new measures also include controls on related technologies, such as those for rare earth mining and magnet production.

In a move seen as a direct response to China’s rare earth dominance, the U.S. signed a critical minerals agreement with Australia. In retaliation for the Chinese restrictions on exporting rare-earth minerals, which are critical for US technology and defence industries, President Donald Trump also threatened to impose a 100 per cent tariff on Chinese goods, beginning November 1, 2025.

Reciprocal maritime fees also indicate the escalating tensions. In October 2025, the US and China also began imposing reciprocal maritime port fees on each other’s vessels. The US fees target Chinese-owned or operated vessels, while China’s retaliatory fees are for US-linked vessels. In international trade, a US-linked vessel can be defined by its ownership, operation, or country of registry (flag). The fees are being implemented in phases, starting in October 2025 and increasing annually through 2028, with the specific amounts differing between the two countries.

The recent measures—including export controls, new tariffs, and port fees—indicate a pattern of escalating tensions in the weeks leading up to potential high-level talks. A comprehensive deal is unlikely in the near term, and a renewed pause in tariffs is the most probable outcome of the Apec meeting. The negotiations continue to face deep-seated disagreements over core issues such as technology transfer, market access, and intellectual property.

If the negotiations fail to produce a more permanent agreement by the November 10 deadline, the original higher tariff rates could be reimposed. While this is a possibility, analysts have noted that both sides have shown a willingness to maintain open communication channels. Failure of US-China trade talks could bring significant and painful consequences for both countries. A breakdown would mean a deepening trade war marked by higher tariffs, greater uncertainty, and further disruptions to supply chains.

Renewed and higher tariffs on Chinese imports would directly raise costs for American consumers and businesses. A major escalation could drive prices up significantly. Escalating trade tensions would increase uncertainty for businesses, which could freeze investment, hamper growth, and potentially contribute to a recession. The US economy remains heavily dependent on Chinese inputs for many manufactured goods. An abrupt and full separation would cause massive economic shocks to both supply and demand.

There would also be significant consequences for China. Escalating trade tensions and loss of the US market would further slow China’s economic growth, which is already grappling with domestic issues. A prolonged trade war would particularly hurt China’s small businesses, a major engine of its economy, and could lead to rising unemployment. As US tariffs and export controls restrict access to American markets, Chinese manufacturers would need to pivot to other regions, a costly and challenging process.

While China has threatened to weaponise its dominance of rare earth mineral exports, such a move could backfire in the long term. It would accelerate US and allied efforts to find alternative supplies in places like Australia, ultimately eroding China’s monopoly. The economic consequences would extend to other countries that are highly integrated with either the US or Chinese economies. The trade diversion caused by the previous trade war showed that while some nations may benefit from manufacturing relocation, others could suffer from a drop in Chinese demand.

Summing up, the Apec summit provides a forum for direct, face-to-face dialogue between the two leaders, potentially bypassing lower-level disputes and allowing for personal diplomacy. The talks between Trump and Xi will test their ability to navigate a complex and increasingly fragile relationship. Both leaders have political motives driving their strategies, and a positive outcome could be claimed as a victory on the domestic front.

The meeting is not just about bilateral trade. Trump aims to leverage his relationship with Xi to gain Chinese cooperation on other geopolitical issues. He has stated he intends to discuss pressuring Russia over the war in Ukraine. Due to the scale of the two economies, the outcome of any meeting between their leaders has major implications for global trade, supply chains, and market stability.

If talks fail, Trump has threatened to impose 100 per cent tariffs, and China could aggressively enforce its rare-earth mineral export controls or launch antitrust investigations into US firms. A breakdown in dialogue could lead to a renewed cycle of retaliatory policies, causing further market volatility and supply chain disruption.

The writer is a retired Indian diplomat and had previously served as Ambassador in Kuwait and Morocco and as Consul General in New York. Views expressed in the above piece are personal and solely those of the author. They do not necessarily reflect Firstpost’s views.