US-China
In a bid to de-escalate one of the world’s most impactful economic rivalries, delegations from the United States and China have started high-level trade negotiations in Kuala Lumpur, Malaysia. The talks, which began on Saturday, 25 October 2025, come just days before an expected meeting between US President Donald Trump and Chinese President Xi Jinping on the sidelines of the Asia-Pacific Economic Cooperation (APEC) summit in South Korea. With both nations imposing new restrictions on key industries like rare earths and shipping, the discussions aim to prevent further damage from an ongoing tariff war that has rattled global markets.
This latest round of dialogue underscores the fragile state of US-China relations, where trade disputes have spilled over into technology, supply chains, and national security. As the world’s two largest economies negotiate, businesses and consumers worldwide are watching closely, hoping for a truce that could stabilise prices and boost economic growth. The meetings in Malaysia represent a critical step towards salvaging a potential deal, even as both sides flex their muscles with retaliatory measures.
High-Level Delegations Converge in Kuala Lumpur’s Iconic Skyscraper
The talks kicked off in the Malaysian capital, with Chinese Vice Premier He Lifeng leading Beijing’s delegation. He arrived in Kuala Lumpur for discussions scheduled to run until Monday, 27 October 2025. Witnesses, including journalists, spotted He and his team entering Merdeka 118, the world’s second-tallest building, on Saturday morning. The group moved through the lobby without addressing the media and headed to the 92nd floor, where the meetings are taking place.
The US team, led by Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer, entered the building via a separate entrance to maintain discretion. A US Treasury spokesman confirmed the start of the negotiations, while China’s official Xinhua news agency reported that the delegations had “convened” for economic and trade discussions. The choice of Malaysia as a neutral venue highlights its growing role in international diplomacy, providing a backdrop away from the direct pressures of Washington or Beijing.
These sessions, running from 24 to 27 October 2025, focus on consulting on pressing issues such as tariffs, rare earth exports, and soybeans. The discreet nature of the arrivals and the high-floor setting emphasise the sensitivity of the topics, with both sides eager to avoid public escalations that could derail progress.
Escalating Trade War: From Tariffs to Retaliatory Measures
The backdrop to these talks is a damaging tit-for-tat tariff war that has intensified over recent years. US President Donald Trump has repeatedly emphasised his desire for a “good” deal to end the conflict, but he has also threatened to cancel the upcoming leaders’ meeting if concessions are not forthcoming. A temporary trade truce is set to expire on 10 November 2025 unless extended, adding urgency to the negotiations.
Tensions have been fuelled by mutual accusations of unfair trade practices. The US has targeted China’s dominance in sectors like maritime logistics and shipbuilding through a “Section 301” investigation, which concluded that Beijing’s policies were unreasonable and burdensome. In response, both countries have begun imposing arrival fees on each other’s vessels. Under the US measures, implemented earlier this month, Chinese ships face new service fees upon entering American ports. These fees, managed by US Customs and Border Protection, must be paid at least three business days before arrival and are capped at a certain number of voyages per year to avoid excessive burdens on operators.
China swiftly retaliated by introducing “special” port fees on US ships, effective from mid-April each year, with a maximum charge for five voyages annually. This move has hit US freight operators hard, with one shipping CEO reporting a potential $34 million tariff bill for their fleet. The fees apply to vessels entering ports from outside customs territories and are designed to counter what Beijing sees as discriminatory actions. Such measures have raised shipping costs, disrupted supply chains, and increased prices for goods ranging from electronics to agricultural products.
China’s Sweeping Rare Earth Controls Spark Global Concerns
A major flashpoint in the talks is China’s recent expansion of export controls on rare earth elements (REEs), critical materials used in everything from electric vehicles and wind turbines to defence systems and semiconductors. On 9 October 2025, China’s Ministry of Commerce announced stringent new regulations under Announcement No. 61, adding five new REEs to the restricted list and imposing extra scrutiny on exports for semiconductor applications. These controls, effective from 8 November 2025, also ban the export of rare earth mining and processing technologies, marking the strictest measures to date.
Rare earths are essential for high-tech industries, and China dominates global production, supplying over 80% of the world’s needs. The new rules build on earlier restrictions imposed in April 2025 on seven REEs and certain magnets, which already disrupted US supply chains. In retaliation, President Trump threatened to impose 100% tariffs on Chinese imports, warning that such controls threaten US national security and economic interests.
The impact extends beyond the US, affecting allies like Australia, which recently signed a critical minerals deal with Washington to diversify supplies. Demand for REEs is projected to surge as the clean energy transition accelerates, making these controls a strategic lever for Beijing. Experts warn that without resolution, prices could skyrocket, hampering innovations in renewable energy, electric vehicles, and advanced manufacturing. The talks in Malaysia are expected to address ways to ease these restrictions, possibly through quotas or joint ventures, to stabilise global markets.
Battery Materials and Technology Exports Under Scrutiny
In addition to rare earths, China’s new export controls cover battery materials and technologies, effective from 8 November 2025. These include limits on lithium-ion battery components and related innovations, reflecting Beijing’s push to protect its lead in the electric vehicle and energy storage sectors. The US has viewed these moves as part of a broader strategy to dominate green technologies, prompting calls for diversified supply chains.
This expansion of controls has raised alarms in the defence industry, where rare earth magnets are vital for equipment like fighter jets and missiles. The measures could threaten US defence supply chains, leading to pushes for domestic production and partnerships with countries like Australia and Canada. As negotiations proceed, finding a balance between protecting intellectual property and ensuring access to these materials will be key to avoiding further economic fallout.
Anticipated Trump-Xi Meeting at APEC Summit in South Korea
The Malaysia talks pave the way for a highly anticipated bilateral meeting between President Trump and President Xi on 30 October 2025, on the sidelines of the APEC summit in Gyeongju, South Korea. The APEC Economic Leaders’ Meeting officially begins on 31 October 2025 and runs until 1 November, focusing on themes like energy transition, digital transformation, trade, and biotechnology.
Hosted in the historic city of Gyeongju, the summit brings together leaders from 21 economies to discuss regional cooperation. Trump is also scheduled for bilateral discussions with South Korean President Lee, amid traffic restrictions and potential demonstrations in the area. The US-China encounter is seen as a pivotal moment, with Trump aiming to clinch a deal that addresses trade imbalances, intellectual property theft, and market access.
Previous threats from Trump to cancel the meeting have added drama, but recent signals suggest a willingness to negotiate. A successful outcome could extend the trade truce, reduce tariffs, and foster collaboration on global challenges like climate change and supply chain resilience.
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