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The US and China kicked off high-stakes trade talks in Malaysia on Saturday that Washington described as “very constructive” ahead of Donald Trump’s trip to Asia for a summit with Xi Jinping.
Following weeks of mounting tensions between the world’s two biggest economies, US Treasury secretary Scott Bessent and Chinese vice-premier He Lifeng held negotiations in Kuala Lumpur that will help shape the outcome of the summit on Thursday.
This month Beijing announced sweeping export controls on rare earths, prompting Trump to threaten an extra 100 per cent tariff on Chinese imports from November 1 and raising the risk of a return to a full-blown trade war.
The talks take place a day after the US trade representative’s office launched a probe into whether Beijing had complied with a trade deal agreed in Trump’s first term, in a move that could lead to further duties on Chinese imports.
At the end of the first day of talks between He and Bessent, a Treasury spokesperson said the talks had been “very constructive”.
Trump is heading to Malaysia to meet south-east Asian leaders on the first leg of a week-long Asia trip that includes stops in Japan and South Korea, where he will meet Xi.
Speaking aboard Air Force One on his way to Malaysia, Trump said that the US and China would both have to make concessions to reach a trade deal.
“Sure they’ll have to make concessions. I guess we will too,” Trump said. “We’re at 157 per cent tariff for them. I don’t think that’s sustainable for them. They want to get that down, and we want certain things from them.”
Asked what odds he would put on imposing the additional 100 per cent levies on China, Trump said: “I don’t know. I have no odds. I don’t think they would want that. It would not be good for them. I wouldn’t like to see it.”
Beijing has defended the restrictions on rare earths, which are vital to the manufacture of fighter jets, electric vehicles and smartphones, by accusing Washington of putting Chinese companies on an export blacklist.
While Trump has expressed optimism about the outcome of the summit with Xi, several people familiar with the matter said Beijing appeared reluctant to roll back the planned export controls, which US officials have criticised as disproportionate.
The spectre of a trade war between the US and China has loomed over the global economy since April, when the White House hit Beijing with 145 per cent tariffs and Xi retaliated by slapping 125 per cent levies on US exports.
Washington and Beijing subsequently reached a truce to pause the duties that in August was extended to November 10. Both sides have accused the other of violating the spirit of negotiations.
After meeting south-east Asian leaders in Malaysia on Sunday, Trump will fly to Japan to meet Sanae Takaichi, Japan’s new prime minister.
Takaichi, the new Japanese prime minister, announced an acceleration of Tokyo’s defence spending that analysts said would give her scope to pledge further expansion of the military budget during Trump’s visit.
Speaking at the Mount Fuji Dialogue forum in Tokyo on Saturday, US ambassador to Japan George Glass said Trump was visiting Japan “at a time of rising tensions in the region”.
“This is a very tough neighbourhood,” Glass said. “The US-Japan alliance and our partners face determined and dangerous adversaries, adversaries that will do whatever it takes to undermine our alliance and weaken our regional partnerships.”
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