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Bessent, Scott

US-China Tensions Ease as Trump and Xi Jinping Prepare for Late October Meeting

Strategic Insights

— 2 min read

US Treasury Secretary Scott Bessent announced on Monday that tensions between the US and China had de-escalated, paving the way for a meeting between President Donald Trump and Chinese leader Xi Jinping in late October. The two leaders had planned to meet during the Asia-Pacific Economic Cooperation forum, and despite a recent rupture over tariff threats and export controls, the meeting is still expected to take place. The softened tone from the US has soothed Wall Street, leading to a strong rebound in US stocks, with the Nasdaq Composite index up nearly 2% and other major indexes up about 1%.

Key Takeaways:

  • US Treasury Secretary Scott Bessent stated that tensions between the US and China had "substantially de-escalated" and that the meeting between Trump and Xi Jinping in Korea was still expected to take place.
  • The meeting was initially planned to take place during the Asia-Pacific Economic Cooperation forum in late October, and despite recent disruptions, it remains on schedule.
  • Trump announced that tariffs on Chinese goods would not go into effect until November 1, providing a temporary reprieve to the markets.
  • US-China staff-level meetings are scheduled to take place this week in Washington, and the US has been in contact with allies, including Europeans, Indians, and democracies in Asia, to discuss the situation.
  • The US has called China's move to expand rare earths export controls "provocative" and has pushed back aggressively.
  • China has defended its curbs on exports of rare earth elements, stating that foreign companies producing some of the rare earths and related magnets will now require a Chinese export license.
  • The US has stated that it would reject licensing requirements from China, and the situation remains a point of contention between the two nations.

Statistics:

  • The Nasdaq Composite index rose by nearly 2%, and other major indexes up about 1%, on Monday after the toned-down rhetoric from the US.
  • The S&P 500 Index dropped by more than 2% on Friday, its biggest one-day drop since April, following Trump's broadside on China's trade policies.
  • The rare earth elements market is critical to tech manufacturing, with China dominating the market for such elements.
  • US-China trade tensions have been escalating since April, with a steady barrage of tariff announcements from Trump causing market volatility.

Sources:

  • "US-China tensions ease ahead of Trump-Xi meeting" by Danielle Shay, Fox Business Network (Monday, 2023)
  • "Trump says China tariffs won't take effect until Nov 1, key meeting still on schedule" by Reuters (Monday, 2023)
  • "China defends rare earth curbs, US pushes back aggressively" by Bloomberg (Sunday, 2023)
  • "US, China clash over rare earths, a key component in tech manufacturing" by The Washington Post (Friday, 2023)
  • "Saudi Research and Publishing Co." by SyndiGate Media Inc. (Monday, 2023)

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