US President Donald Trump remains on track to meet Chinese leader Xi Jinping in South Korea in late October, US Treasury Secretary Scott Bessent said, as both sides looked to ease tensions following fresh tariff threats and export controls.
A return to an all-out trade war between the world's two largest economies appeared imminent late last week, after China announced on Thursday a major expansion of its rare earths export controls. Trump responded on Friday by threatening to raise tariffs on Chinese goods to triple-digits, sending markets and US-China relations into a tailspin.
But after the weekend, Bessent and China's Commerce Ministry sought to reassure traders and investors on both sides of the Pacific, highlighting the cooperation between their negotiating teams and the possibility they could find a way forward from the current tariff truce.
The language in statements from both sides remains tough, however.
"We have substantially de-escalated," Bessent said in an interview with Fox Business Network on Monday.
Substantial communications between the two sides had taken place over the weekend and there would be US-China staff-level meetings this week in Washington on the sidelines of the World Bank and International Monetary Fund annual gatherings, he added.
"The 100 per cent tariff does not have to happen," Bessent said. "The relationship, despite this announcement last week, is good. Lines of communication have reopened, so we'll see where it goes."
"President Trump said that the tariffs would not go into effect until November 1. He will be meeting with Party Chair Xi in Korea. I believe that meeting will still be on."
Trump and Xi had planned to meet during the summit of the Asia-Pacific Economic Cooperation forum hosted by South Korea in late October.
In a statement on Tuesday, China's Commerce Ministry confirmed that a working-level meeting had taken place the previous day, while highlighting earlier formal negotiations held in London, Stockholm and Madrid, culminating in a 90-day tariff extension.
But the statement from a Commerce Ministry spokesperson complained, "the US cannot ask for talks while simultaneously threatening new restrictive measures."
Over the weekend, officials from both sides looked to shift the blame for risking a renewed trade war onto each other.
US Trade Representative Jamieson Greer said on Sunday that China had deferred Washington's request for a phone call following Beijing's rare earths announcement, calling the move a "power grab".
That same day, China's Commerce Ministry criticised the addition of Chinese companies to a US trade blacklist and the imposition of port fees on China-linked ships.
Wall Street's main indexes ended as much as 2.2 per cent higher on Monday, following Bessent's signal that trade negotiations between the two superpowers remain on track, and Asian stocks made a tentative rebound in early trade on Tuesday.
Markets shrugged off the US and China sticking with retaliatory port fees, with shares of Chinese shipping giant COSCO - likely the most affected firm - rising more than two per cent in Shanghai to a three-week high, buoyed by a share buyback plan.
Both sides remain ready for a fight, however, accusing each other of attempting to derail the global economy.
"China is a command-and-control economy. They are neither going to command nor control us," Bessent said, adding that the White House had been in contact with allies and expects support from the Europeans, India and democracies in Asia.
Meanwhile, Beijing said it sought to, "jointly maintain the security and stability of global production and supply chains," defending its new export licensing regime. Some analysts say the new regime could affect the manufacture of everything from cars to washing machines, even when no Chinese companies are involved in the final product.
The US would reject licensing requirements from China, Bessent said in the interview on Mornings with Maria.
"China's position is consistent: if the US wants a fight, China will respond to the end. If it wants to talk, China's door is open," the Commerce Ministry's statement said, before softening to focus on the prospect of Xi and Trump reaching a breakthrough.
"Guided by the important consensus reached in the recent call between the two presidents, both sides should safeguard the hard-won progress of consultations," the statement concluded.
(Reporting by Susan Heavey, Doina Chiacu, David Lawder and Joe Cash in Beijing; Writing by Doina Chiacu and Joe Cash; Editing by Hugh Lawson, Alistair Bell and Lincoln Feast)