“After a face-to-face with Chinese leader Xi Jinping, President Trump said the meeting wasn't just nice, it was a 12 on a scale of one to 10.
But for businesses caught between the two superpowers, the ugly reality remains: The U.S. and China haven't addressed their underlying conflicts. Commerce is going to be rocky for years to come.
U.S. tariffs on Chinese goods are still historically high, even after Trump lowered them somewhat. Beijing backed off on its latest harsh export controls on rare-earth minerals vital to making products from electric vehicles to jet fighters, but an opaque licensing system continues to frustrate U.S. manufacturers.
And despite kind words exchanged between Trump and Xi, they didn't touch the root causes of the standoff between the world's two largest economies -- including China's trade surplus, its industrial subsidies and both countries' quest for technology domination.
"This truce is positive for now, but we should all expect tensions to escalate in the future," said Wendy Cutler, a former U.S. trade negotiator now at the Asia Society Policy Institute in Washington.
At the Trump-Xi summit in South Korea -- the first in-person meeting between the leaders in six years -- the U.S. agreed to lower a fentanyl-related tariff on Chinese goods to 10% from 20%, in exchange for a promise by China to crack down on chemicals used to make the often-deadly drug. That would bring the average tariff rate on many Chinese goods to around 47% from 57%, Trump said.
U.S. consumers as a result will likely pay a bit less for made-in-China products, which could become relatively more attractive compared with other countries' goods. In the first nine months of 2025, China's exports to the U.S. were down nearly 17% from a year earlier ago, according to Chinese government data.
Businesses said the yearslong trend of U.S. companies' moving production out of China is here to stay. Tariffs on most goods remain higher for China than for alternative countries such as Vietnam and Thailand, and conflict between the two superpowers could erupt again.
Benjamin Jurken, vice president of the ABC Group in Milwaukee, helps U.S. businesses manage supply chains in Asia and has been working with clients to shift from China into places such as Vietnam, Malaysia and India. The latest tariff reprieve won't change their course, he said.
"Many have already made the strategic decision to diversify in some form outside of China regardless of tariff reductions," Jurken said.
Tariffs this year have cut into profit for Nicole Craft Brands, which produces most of its arts-and-crafts products in China, according to George Thorp, senior vice president of global sourcing. It came as a relief that Trump wasn't going to add a new 100% tariff on Chinese goods, as he had threatened, and that the fentanyl-related duty was cut in half.
Still, the company is pushing ahead with plans to establish new suppliers outside of China. Thorp said the business has been considering factories in Vietnam, Mexico, Pakistan, Indonesia and Turkey.
"It just didn't make sense to have all our production in one country," Thorp said.
Michel Bertsch, a Belgian national who runs a business in Vietnam making children's furniture such as high chairs, said he has seen a large increase in U.S. customers over the past year eager to buy products made outside of China.
"Customers who wanted to move out of China already did so and they won't come back to China suddenly," he said.
U.S. companies are likely to continue looking for non-Chinese sources of rare earths, despite the Trump-Xi deal.
Trump said after the meeting that the roadblock to importing rare earths has been removed and that rare earths will hopefully "disappear from our vocabulary for a little while."
While China agreed to suspend new draconian restrictions on rare-earth exports that it announced Oct. 9, it said nothing to alter the licensing regime it introduced in April.
That means U.S. auto, electronics and defense companies wishing to import Chinese rare-earth magnets still must undergo the onerous process of securing government licenses, which can take many weeks and sometimes result in denials.
One magnet importer said the supply chain remains at least seriously delayed, even if some licenses are granted.
Technology remains a flashpoint. The U.S. and China are locked in a rivalry over cutting-edge areas such as artificial intelligence and quantum computing. Both have weaponized the technologies they control, using them as leverage at the negotiating table.
The Trump-Xi detente rolled back some recent measures on both sides but keeps in place many U.S. high-tech export controls that have irked Beijing. Case in point: The U.S. is keeping a trade blacklist of Chinese companies that it says pose national-security risks, but it suspended for a year a rule announced in late September that would have expanded the blacklist to subsidiaries at least 50% owned by companies on the list.
That rule is linked to a dispute between a Chinese company and the government of the Netherlands, leading China to block exports of some chips critical to auto production worldwide.
"In effect, both sides just took a time machine back to the pre-Sept. 29 status quo," except for the 10% tariff cut tied to fentanyl enforcement, said Feng Chucheng, founding partner of Beijing advisory firm Hutong Research. "For Beijing, this episode will reinforce confidence in the strategy of industrial resilience."
China's access to advanced Nvidia chips is set to be sorted out in the coming weeks after Trump said Nvidia Chief Executive Jensen Huang would discuss the issue with Chinese officials. Beijing is considering allowing Chinese companies to resume purchases of some Nvidia chips for AI, people familiar with the matter said, after telling them to halt buying since August.
Days before the Trump-Xi meeting, the Chinese leader laid out a five-year plan to develop a self-sufficient supply chain and secure competitive advantage. China pledged extraordinary measures to pursue breakthroughs in key technologies such as semiconductors. Trump also touted plans to revive U.S. manufacturing with the help of hundreds of billions of dollars in investment from allies Japan and South Korea.
"There's no change to the fundamentals of the U.S.-China relationship," said Daniel Kritenbrink, a partner at the Asia Group, an advisory firm, and a former longtime diplomat in Asia. "It's going to continue to be the world's most complex, competitive relationship."” [1]
1. Trade Detente Brings Little Peace to Business. Miao, Hannah; Emont, Jon; Huang, Raffaele. Wall Street Journal, Eastern edition; New York, N.Y.. 31 Oct 2025: A1.
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