Paulo Aguiar
The Busan framework agreement between the United States and China, announced after their summit in South Korea, marks a temporary pause in their long and often tense trade and economic conflict. It eases immediate financial and political pressures on both sides by lowering tariffs and suspending some export restrictions. Yet the deal does not address the deeper sources of tension that have fueled years of confrontation between the world’s two largest economies.
In effect, the framework offers a breathing space rather than a solution. China benefits by regaining flexibility and preserving control over key strategic resources, while the United States gains short-term political relief and modest economic stability as it approaches the 2026 midterm elections. Both sides keep the ability to interpret and enforce the agreement as they see fit, which almost guarantees that new disputes will arise.
The next year is likely to be defined by “managed instability.” The two countries will cooperate just enough to avoid a breakdown but will continue to view one another as strategic competitors. Businesses and global markets will see temporary calm but remain wary of another escalation. The deeper technological, political, and strategic rivalries that shape US–China relations remain fully intact.
What Happened
On October 30, 2025, President Donald Trump and President Xi Jinping met in Busan, South Korea, to halt a renewed spiral of tariffs and trade barriers that had built up throughout the year. Both leaders faced strong domestic pressure to avoid another economic shock—Trump from US farmers and manufacturers frustrated by high tariffs, and Xi from a slowing Chinese economy affected by weakened exports and tight US trade controls.
The resulting “Busan framework” is a one-year agreement aimed at easing tensions:The United States agreed to reduce its 20% tariff on Chinese imports linked to fentanyl concerns to 10% and to suspend a threatened 100% tariff increase on Chinese goods. Washington also paused an investigation into Chinese shipping practices and suspended certain restrictions on Chinese-owned firms that had been placed on the US Entity List for one year.
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