US-China Trade Talks 2025: 100% Tariff Threats and 7% GDP Risk

US-China Trade Thaw: Talks in Malaysia Signal De-Escalation

Global eyes turn to Malaysia. U.S. Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng plan a pivotal meeting next week. Tensions over tariffs and rare earths hang heavy. Yet, a recent video call sparked hope. Both sides called it “frank” and “constructive.” President Trump admits high tariffs aren’t sustainable. A summit with Xi Jinping looms in South Korea. Markets rally on the news.

Recent Video Call Builds Momentum

Bessent and He spoke Friday evening. Discussions covered bilateral trade deeply. U.S. praised the exchange as detailed. China echoed with “candid, in-depth” praise. They agreed to meet soon. This follows four prior rounds in Europe. A truce from those talks expires November 10.

Why Malaysia? Neutral Ground for Tough Talks

Malaysia trades heavily with both giants. It faces U.S. duties too. 19% on goods. 100% threatened on chips. The venue highlights regional stakes. Southeast Asia bridges powers. Ports bustle with containers. Local voices pray for calm seas.

Agenda: Rare Earths and Tariff Threats

China’s export curbs on rare earths ignited the fire. Vital for tech and defense. U.S. calls it a supply chain threat. Trump threatened 100% tariffs by November 1. Software export bans too. Talks aim to extend the truce. Avoid escalation.

Trump’s Bluff? Tariffs “Not Sustainable”

Trump spoke bluntly on Fox. “It’s not sustainable,” he said of high tariffs. Blamed China for forcing his hand. Yet, optimism crept in. “We’re going to be fine,” he added. Admired Xi as a strong leader. Softened tone stemmed market dips.

Trump-Xi Summit: South Korea’s High Stakes

APEC summit starts October 31 in Gyeongju. Trump confirms a meeting with Xi. “In a couple weeks,” he said. First since 2019. Bessent calls it on track. Topics spill beyond trade. Fentanyl. Ukraine. TikTok. Seoul prepares for extended stays.

Geopolitical Layers in Play

South Korea hosts carefully. Possible trilateral with Yoon. Trump eyes Kim Jong Un too. Venue: Hwabaek Center. Banners boast perfection. Reality? Tense dance. Social media buzzes with speculation.

History Echoes: Phase One’s Shadow

2020 deal fell short. Purchases missed targets. Tensions simmered. Now, rare earths revive old wounds. Trump claims leverage. China stays coy. Allies like Europe and India watch. Bessent seeks their backing.

Verbal Spars Heat Up Negotiations

Bessent slammed a Chinese aide as “unhinged.” Beijing fired back. “Distorts facts.” At IMF, Bessent urged tougher stances on China’s imbalances. Commerce Ministry accused U.S. of rule-breaking. Vows more WTO disputes.

WTO’s Dire Warning: 7% GDP Hit Looms

Director-General Ngozi Okonjo-Iweala urges calm. Decoupling could slash global output by 7%. She’s called both sides. Pushed dialogue. “No financial stability without trade stability,” she told G20. Forecasts dim: 0.5% trade growth in 2026.

Multilateralism Frays Under Pressure

72% of trade still follows WTO rules. But bilateral deals erode trust. China decries U.S. hypocrisy. Bessent pushes IMF action on overcapacity. Steel and EVs flood markets. Poor nations brace for fallout.

Global Chains at Risk

Fragmentation divides economies. U.S.-led bloc vs. China-centered one. Bilateral trade could drop 80%. Inflation spikes. Supply snaps. Okonjo-Iweala: “Come together now.”

Market Pulse: Relief Rally Takes Hold

Wall Street reversed early losses. S&P up 0.8%. Nasdaq jumped 1.2%. Banks rebounded from credit jitters. Crypto steadied. Bitcoin at $106K. “Relief rally,” analysts tweet.

Social Media Chatter: Optimism Meets Skepticism

Posts flood in. “De-escalated,” Bessent tweets. Users hail “macro catalyst.” One notes IMF meetings paled next to the call. Doubts linger. “Policy whiplash?” Others eye bulls in a thaw.

Broader Ripples: From Chips to EVs

Semiconductors face threats. EVs stall without minerals. Phones pricier. Defense lags. India woos factories. Vietnam gains ground. Europe frets dumps.

Human Toll: Jobs and Growth in Balance

U.S. farmers recall soybean pain. Tariffs shield some, hurt many. China buffers with state aid. Growth slows. Developing worlds crumble under 7% hit.

Paths to Peace: Incremental Wins Ahead

Malaysia tests resolve. Seoul could seal deals. Concessions on earths? Software flows? TikTok as footnote. Optimists see thaw. Pessimists spy ploys.

Diplomacy’s Dance Continues

Dialogue endures. Giants converse. World listens. On October 18, wires hum. Diplomats move. Markets whisper. Missteps cost. But talks offer light.