Trade Tensions: U. S. and China Meet in Malaysia to Avoid Economic Showdown

High-level economic representatives from the United States and China are set to meet in Kuala Lumpur to prevent a trade war from worsening. The discussions aim to ensure that the upcoming meeting between U. S. President Donald Trump and Chinese President Xi Jinping goes smoothly. The talks, scheduled to begin on Saturday, are the fifth round between the parties since May. This time, they are happening in Malaysia, a significant exporter that relies on both the U. S. and China. The focus is on China's control over rare earth minerals and magnets, which are crucial for advanced manufacturing. Beijing has used this control as leverage against Washington. In April, Trump imposed new tariffs on Chinese imports, leading to a rapid escalation. China responded by cutting off rare earth supplies to U. S. buyers, threatening production of electric vehicles, semiconductors, and weapons systems. The first meeting in Geneva in May resulted in a 90-day truce, reducing tariffs and restarting the flow of magnets. Subsequent meetings in London, Stockholm, and Madrid refined these terms and led to a deal on the Chinese app TikTok. However, the truce broke down when the U. S. expanded its export blacklist, affecting thousands of Chinese firms. China retaliated with new global rare earth export controls, aiming to prevent their use in military systems. The U. S. criticized China's move as a "global supply chain power grab" and hinted at further export curbs on software-powered goods. Analysts suggest that the challenge in Kuala Lumpur is to negotiate a return to the previous status quo to keep magnets flowing and avoid a massive U. S. tariff hike. Failure could lead to the cancellation of the Trump-Xi meeting in South Korea during the Asia Pacific Economic Cooperation Summit. The U. S. is also likely to push China to resume buying American soybeans, which would help U. S. farmers, a key Trump constituency. However, the talks are less likely to address the core U. S. complaints about China's export-driven economic model, which prompted Trump's tariffs in the first place.