Chinese Vice Premier He Lifeng arrives for trade talks between the United States and China at the Merdeka 118 Tower in Kuala Lumpur, Malaysia, on October 25, 2025. (Photo: Reuters/Hasnoor Hussain)
A Fragile Peace Tested in Kuala Lumpur
Top U.S. and Chinese economic officials met in Kuala Lumpur, Malaysia, on Saturday in a last-ditch effort to stop their trade war from reigniting — and to keep a crucial Trump–Xi meeting on track next week.
The talks, held on the sidelines of the ASEAN summit, come amid rising tensions after President Donald Trump threatened 100% tariffs on Chinese imports starting November 1. The move follows Beijing’s expanded export controls on rare earth minerals, a vital component in global technology and defense supply chains.
Both sides are hoping to cool things down before the leaders meet at the Asia-Pacific Economic Cooperation (APEC) summit in South Korea — a conversation that could determine whether cooperation or confrontation defines the next phase of U.S.-China relations.
Behind Closed Doors at Merdeka 118
The talks bring together a powerful delegation on both sides:
- Scott Bessent, U.S. Treasury Secretary
- Jamieson Greer, U.S. Trade Representative
- He Lifeng, Chinese Vice Premier
- Li Chenggang, China’s chief trade negotiator
Witnesses saw the Chinese officials arriving at the Merdeka 118 Tower, the world’s second-tallest building — a fitting metaphor for how high the stakes are.
Neither government has released details of the discussions or announced plans for a media briefing, underscoring the sensitivity of the negotiations.
Tariffs, Tech, and Rare Earths: The Flashpoints
Washington’s latest move — expanding its export control blacklist to cover thousands more Chinese firms — has infuriated Beijing. In response, China announced sweeping rare earth export restrictions, effectively cutting off key materials used in electric vehicles, semiconductors, and military systems.
The tit-for-tat actions threaten to unravel a 90-day trade truce first brokered in Geneva in May, which temporarily lowered tariffs and resumed the flow of rare earth exports. That fragile peace, renewed during talks in London and Stockholm, now hangs by a thread.
“Bessent, Greer, and He Lifeng have to find a way to defuse the technology export and rare earth disputes,” said Josh Lipsky of the Atlantic Council. “But it’s unclear whether Beijing can give up its main leverage.”
Trump’s Priorities: Soybeans, Taiwan, and Hong Kong
Before boarding Air Force One for his first Asia trip as president, Trump told reporters he expects a “good meeting” with Xi — but didn’t shy away from his list of demands.
He said he would raise:
- China’s freeze on U.S. soybean imports, which has devastated American farmers
- Taiwan, the democratic island China claims as its territory
- The case of Hong Kong media tycoon Jimmy Lai, whose imprisonment has drawn international condemnation
Trump stressed that he does not plan to visit Taiwan during his five-day trip through Malaysia, Japan, and South Korea.
“We have a lot to talk about with President Xi, and he has a lot to talk about with us,” Trump said. “I think we’ll have a good meeting.”
Analysts Warn: One Wrong Move Could Spiral
Policy experts say the Malaysia talks could determine whether the world’s two biggest economies pull back from confrontation or plunge into a new escalation.
“If Trump and Xi make a deal, their gamble pays off,” said Scott Kennedy, a China specialist at the Center for Strategic and International Studies. “If not, everyone should prepare for things to get much nastier.”
The delicate balance hinges on whether China agrees to ease its rare earth controls — something Washington sees as essential — and whether the U.S. delays its planned new tariffs.
Rare Earths: China’s Most Powerful Bargaining Chip
China controls roughly 70% of global rare earth production, giving it massive influence over industries from renewable energy to defense. Its October 10 decision to restrict global exports is seen by Washington as a “supply chain power grab.”
In response, the Trump administration has reportedly explored new curbs on high-tech exports to China, including laptops, semiconductors, and aviation technology.
Adding to the friction, the White House on Friday announced a tariff probe into China’s alleged failure to honor its 2020 “Phase One” trade deal, signed during Trump’s first term.
“Both sides say they want stability,” one Asian diplomat told Reuters, “but neither wants to blink first. That’s a dangerous mix.”
What to Watch Next
Trump is scheduled to arrive in Kuala Lumpur on Sunday, ahead of his planned sit-down with Xi in Seoul later in the week. The focus will likely be on:
- Rolling back rare earth restrictions
- Halting new tariff rounds
- Reopening agricultural and tech trade channels
But with tempers high and trust low, diplomats are bracing for anything from a handshake deal to a complete breakdown.
