US and China kick off trade talks ahead of high-stakes Trump-Xi summit

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The United States and China began 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.

After weeks of escalating tensions between the world’s two largest economies, US Treasury Secretary Scott Besent 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 strict controls on exports of rare earths, prompting Trump to threaten to impose an additional 100% tariff on Chinese imports from November 1, and raising the risk of a return to an all-out trade war.

The talks are taking place a day after the Office of the US Trade Representative launched an investigation into whether Beijing has adhered to a trade agreement reached during Trump’s first term, in a move that could lead to more tariffs being imposed on Chinese imports.

At the end of the first day of talks between her and Besant, a Treasury spokesman said the talks had been “very constructive.”

Trump heads to Malaysia to meet with Southeast Asian leaders on the first leg of his week-long Asian tour 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 the United States and China would have to make concessions to reach a trade deal.

“They’re definitely going to have to compromise,” Trump said. “I think we will, too.” “We’re charging them a 157 percent tariff. I don’t think that’s sustainable for them. They want to get that down, and we want certain things from them.”

When asked what odds he might place on imposing 100% additional tariffs on China, Trump said: “I don’t know. I don’t have any odds. I don’t think they want it. It wouldn’t be in their best interest. I wouldn’t like to see that.”

Beijing has defended the restrictions on rare earths, which are vital for manufacturing fighter jets, electric vehicles and smartphones, by accusing Washington of putting Chinese companies on an export blacklist.

While Trump expressed optimism about the outcome of the summit with Xi, several people familiar with the matter said Beijing appears reluctant to roll back planned export controls, which US officials have criticized as disproportionate.

The specter of a trade war between the United States and China has loomed over the global economy since April, when the White House imposed 145% tariffs on Beijing, and Xi responded by imposing 125% tariffs on American exports.

Washington and Beijing then reached a truce to stop the tariffs, which was extended in August until November 10. Both sides accused the other of violating the spirit of the negotiations.

After meeting with Southeast Asian leaders in Malaysia on Sunday, Trump will head to Japan to meet with Sanae Takaishi, Japan’s new prime minister.

Takaishi, the new Japanese prime minister, announced an acceleration of Tokyo’s defense spending, which analysts said would give her room 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 when tensions are rising in the region.”

“This is a very tough neighborhood,” Glass said. He added, “The US-Japan alliance and our partners face determined and dangerous adversaries, adversaries who will do whatever it takes to undermine our alliance and weaken our regional partnerships.”