U.S.-China Trade Thaw Emerges as Trump Leverages ASEAN Summit for Broader Deals

The familiar rhythm of U.S.-China trade relations appears to be shifting toward a temporary détente, with Treasury Secretary Scott Bessent hailing what he called “a very successful framework” ahead of a critical meeting between President Donald Trump and Chinese leader Xi Jinping. According to reports from the ASEAN summit in Kuala Lumpur, both sides are signaling that a deal is within reach—though seasoned trade watchers should temper expectations about any fundamental resolution to the underlying technological and manufacturing competition between the world’s two largest economies.

The Art of the Temporary Deal

What’s emerging from the latest negotiations looks less like a comprehensive trade agreement and more like a carefully staged truce. Sources indicate the preliminary consensus includes Chinese commitments to block precursor chemicals for fentanyl from reaching the United States and make “substantial” purchases of American soybeans and other agricultural products. In return, the Trump administration has reportedly taken additional tariff increases “effectively off the table,” while Beijing will pause its threatened export controls on rare earth elements.

This represents classic Trump-era dealmaking—focused on immediate, tangible wins rather than structural reforms. The Chinese get relief from escalating trade pressure ahead of challenging domestic economic headwinds, while the administration can point to concrete deliverables like reduced fentanyl flows and farm state exports. What’s notably absent, however, is any meaningful progress on the core issues that sparked this trade war: forced technology transfer, intellectual property protection, and China’s manufacturing subsidies.

Southeast Asia Strategy Takes Center Stage

Meanwhile, the ASEAN summit provided Trump with a strategic platform to advance what appears to be a deliberate pivot toward Southeast Asia as the U.S. seeks to diversify supply chains away from China. The president signed economic frameworks with Cambodia, Thailand, and Malaysia specifically targeting critical minerals—a clear response to China’s demonstrated willingness to weaponize its dominance in key technology components.

“It’s very important that we cooperate as willing partners with each other to ensure that we can have smooth supply chains, secure supply chains, for the quality of life, for our people and security,” U.S. Trade Representative Jamieson Greer noted, according to summit reports. This language reflects growing Washington consensus about the vulnerability of concentrated supply chains, particularly following China’s recent restrictions on rare earth exports.

Unexpected Diplomatic Breakthrough

In perhaps the most surprising development, Trump leveraged the summit to broker an expanded ceasefire agreement between Thailand and Cambodia—two nations that have experienced sporadic but intense border conflicts, including five days of fighting in July that killed dozens and displaced hundreds of thousands. Regional analysts see this as a demonstration of Trump’s unique approach to international diplomacy, using economic leverage rather than traditional statecraft.

The president had previously threatened to withhold trade agreements unless the fighting stopped, and the resulting truce—while shaky—has held. “We did something that a lot of people said couldn’t be done,” Trump declared, while Cambodian Prime Minister Hun Manet called it a “historic day.” The agreement includes Thailand releasing Cambodian prisoners and Cambodia withdrawing heavy artillery, with regional observers monitoring compliance.

This achievement, while unexpected, fits a pattern of Trump using economic tools to achieve foreign policy objectives. As border tensions have simmered for years, the application of U.S. economic pressure appears to have created conditions for diplomatic progress where traditional methods had failed.

The Broader Geopolitical Chessboard

Beyond the headline agreements, the summit revealed the complex web of relationships Trump is navigating. His meeting with Brazilian President Luiz Inácio Lula da Silva included discussion of potentially reducing tariffs on Brazil in what sources suggest was a push for leniency for former President Jair Bolsonaro, a Trump ally recently convicted of attempting to overturn election results.

Meanwhile, the president pointedly avoided Canadian Prime Minister Mark Carney, announcing on social media he would raise tariffs on Canada because of a television advertisement protesting his trade policies. And Indian Prime Minister Narendra Modi’s absence from the summit highlighted the cooling relationship between Washington and New Delhi, particularly after Trump increased tariffs on India for its purchase of Russian oil.

These bilateral dynamics underscore how trade policy has become the primary instrument of Trump’s foreign policy—a tool used to reward allies, punish critics, and advance strategic objectives beyond mere economic considerations.

Market Implications and Economic Realities

For global markets, any de-escalation in U.S.-China trade tensions would provide welcome relief, even if temporary. The threat of a widening conflict between the $25 trillion U.S. economy and $18 trillion Chinese economy had raised concerns about weakening worldwide growth. However, experienced trade analysts caution that the underlying structural issues—particularly around technology competition and semiconductor access—remain largely unaddressed.

The ongoing battle over advanced computer chips represents perhaps the most strategically significant aspect of the broader trade relationship, and there’s little indication either side is prepared to compromise on what they view as essential to national security and economic dominance.

Looking Ahead: Temporary Relief or Lasting Solution?

As Trump prepares to meet with Xi Jinping in South Korea, the framework taking shape suggests both leaders want to claim victory while postponing the most difficult decisions. The Chinese get stability in their crucial export relationship and relief from additional tariffs, while Trump secures deliverables he can highlight ahead of the election season.

Yet the fundamental tensions—between American technological protectionism and Chinese industrial ambitions—remain unresolved. The rare earth element standoff, while temporarily paused, illustrates how both sides now recognize the strategic value of supply chain dominance. Similarly, the ASEAN economic frameworks signal a longer-term U.S. strategy to build alternative partnerships that reduce dependence on China.

What emerges from this summit may provide short-term market comfort and political wins for both administrations, but the technological cold war continues unabated. The real test will come when these temporary arrangements inevitably collide with the structural realities of great power competition.