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(This article is part of the View From India newsletter curated by The Hindu’s foreign affairs experts. To get the newsletter in your inbox every Monday, subscribe here.)
Ahead of meeting Chinese President Xi Jinping on October 30 in Busan, South Korea, U.S. President Donald Trump framed the talks as “a G2 summit”. After the talks, in which both sides agreed to de-escalate their trade war, Mr. Trump referred to China as “the biggest partner of the United States”. On November 2, Pete Hegseth, Mr. Trump’s Secretary of War, said he had a meeting with China’s Minister of Defence Dong Jun in Malaysia. “As President Trump said, his historic “G2 meeting” set the tone for everlasting peace and success for the U.S. and China… Admiral Dong and I also agreed that we should set up military-to-military channels to deconflict and deescalate any problems that arise. We have more meetings on that coming soon,” Mr. Hegseth wrote in a social media post. On the same day, Mr, Trump said his “G2 meeting with President Xi of China was a great one for both our countries. This meeting will lead to everlasting peace and success”. The message was clear. Washington looks at China as a peer superpower, and wants strategic stability in the bilateral relations between the two.
At the Busan summit, both China and the U.S. made concessions to reach a trade truce. But the concessions made by the U.S., the greater power that started the trade war with high tariffs, were stark. A few days before the summit, Mr. Trump had threatened to impose 100% additional tariffs on China starting November 1 and cancel the planned talks. But he went to South Korea, met Mr. XI and agreed to slash the 20% tariffs his administration had imposed on China over fentanyl by half, bringing Trump’s overall tariffs imposed on China this year to 20% (it’s 50% on India and 35% on Canada). China, in return, agreed to buy “tremendous amounts of U.S. soybean” and remove export restrictions imposed on rare earth minerals. According to a fact sheet issued by the White House on November 2, China will issue general export licences for rare earths, gallium, germanium, antimony and graphite “for the benefit of US end users and their suppliers around the world”. Beijing had imposed restrictive controls on the rare earths in April and October 2025. Mr. Trump also said he would remove all the fentanyl-related tariffs on China if Beijing continued to crack down on exports of the drug and the chemicals used to make it.
What Mr. Trump ‘resolved’ is a crisis that he himself made. China started cutting American soybean purchases after Mr. Trump imposed his Liberation Day tariffs in April. Beijing had introduced a licensing system on rare earths during the Biden administration in response to U.S. tech controls, but it enlarged it to major restrictions on rare earth exports in April, after the Trump tariffs. China also matched U.S. tariffs with counter-tariffs in the initial round of the trade war until Mr. Trump decided to cut tariffs from 145% to 30% in May. This has now been reduced to 20%.
China has two leverages in their hands. One, the decision to cut soybean purchases hurt Mr. Trump in his farm country, his base. Two, more important, China produces 70% of the world’s total rare earths. The U.S. share is 11%. (India’s 0.7%). If one looks at the reserves, China’s reserves are estimated to be 44 million tonnes, whereas America’s reserves are 1.9 million tonnes. Brazil comes second with 21 million tonnes, Greenland [which Mr. Trump wants to join the U.S.] has 1.5 million tonnes. China has not just reserves, it has also developed the production technology, which allows the country to be a leader in the sector for the foreseeable future. This gives China enormous leverage in any trade war with the U.S. And Beijing’s decision to use the leverage helped its hands in talks with the U.S. As The Hindu wrote in its editorial, “the trade war has thus underscored a decisive shift: the U.S. remains the world’s largest consumer market, but China has entrenched itself as the world’s foremost factory with global leverage over intermediate goods, high-end technology and critical minerals.”
While the truce is good news for the global economy, this may well be a tactical de-escalation. The trade and technological disputes between the world’s two largest economies are deeply rooted in the global competition they are involved in, and there could always be a spark for the next round. Besides trade, there are pressing geopolitical issues such as Taiwan, disputes in the South China Sea and Russia’s war in Ukraine where there is no consensus. But what is clear is that the U.S. has acknowledged that China is and will remain a peer competitor—in other words, the world is no longer unipolar.
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Published – November 03, 2025 05:09 pm IST
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The View from India | The rise of the G2
