Delicate Busan Agreement Relieves Trade Strains, Geopolitical Issues Remain Unsettled

In Busan, South Korea, President Donald Trump and Chinese President Xi Jinping have reached a significant trade pact, signaling a major change in U.S.-China relations during a period of rising global economic strain. Known as the "Busan Truce," this agreement features tariff cuts, agricultural pledges, and a temporary halt to restrictions on rare-earth exports, indicating a careful attempt to reset a relationship that has long shaped international trade, according to

. Announced on October 30, 2025, the deal comes after extensive diplomatic efforts and as both countries look for stability before a planned 2026 round of talks on technology and digital policy, the STL News report stated.

A central element of the deal is a 10% reduction in U.S. tariffs on Chinese goods such as electronics and machinery, lowering the overall rate from 57% to 47%, as reported by

. In return, China will suspend retaliatory tariffs on American products and remove rare-earth export limits for at least a year—a key concession for U.S. technology and defense industries that depend on these resources. The U.S. will also continue limited tariff exemptions for certain industrial chemicals, while China has promised stricter measures against the export of fentanyl precursors, a major concern for the Trump administration.

Another key aspect of the agreement is agricultural collaboration. China has agreed to resume large-scale imports of U.S. soybeans, corn, pork, and wheat, providing much-needed support to American farmers affected by export disruptions since the 2018 trade conflict, according to the STL News report. This initiative is projected to inject $15–25 billion into rural communities and strengthen Trump’s trade agenda ahead of the 2026 midterm elections, the STL News report added.

Although the pact stops short of sweeping reforms, it addresses urgent economic challenges for both nations. For the U.S., reduced tariffs and steady agricultural sales may help curb inflation and stabilize global supply chains. For China, the agreement offers time to address its slowing economy and diversify energy sources, as it also includes increased U.S. liquefied natural gas (LNG) exports, the STL News report noted.

Despite these advances, the agreement remains delicate. Previous deals, such as the 2020 Phase One agreement, have failed due to lack of compliance and ongoing geopolitical disputes. Experts warn of potential issues with China’s enforcement of fentanyl regulations, actual implementation of agricultural purchases, and unresolved matters related to advanced semiconductors and AI chips, as reported by

. The New York Times also noted that Nvidia CEO Jensen Huang expressed doubts about whether the meeting made progress toward resuming advanced chip sales in China, an issue closely tied to U.S. national security interests.

On the political front, the agreement benefits both leaders. Trump bolsters his reputation as a firm but practical dealmaker, while Xi gains economic relief amid internal pressures. Holding the summit in Busan—a neutral location—highlights efforts to reduce political tensions, though major issues like Taiwan and the South China Sea remain unresolved, according to the STL News report.

The Busan Truce has already generated positive market reactions, with global stock prices climbing and commodity markets stabilizing. Still, as Trump remarked, "we do not have too many major stumbling blocks"—a view that will be tested as the fragile peace is challenged in the lead-up to 2026, as noted by a Tribune India report.