China-US trade talks underway in Kuala Lumpur: What’s on the agenda

Top US and Chinese officials gathered this weekend in Kuala Lumpur as part of the Association of Southeast Asian Nations (ASEAN) summit to begin new trade talks to avert a full-scale trade war. This is the fifth meeting between Chinese Vice-Premier He Lifeng, US Treasury Secretary Scott Bessent, and US Trade Representative Jamieson Greer since May.

The Association of Southeast Asian Nations conference, which begins Sunday in Kuala Lumpur, Malaysia, is expected to include US President Donald Trump. Trump and Chinese President Xi Jinping will meet next week in South Korea for the Asia-Pacific Economic Cooperation Summit, Reuters reported.

Main Issues to Discuss

One of the main sources of contention is China's recently enlarged export restrictions on rare-earth materials and magnets, which are essential for defence and the high-tech industry. It is believed that China is using its strong position in the global supply chain to its advantage.

The United States has responded by expanding its export blacklist to include thousands more Chinese companies that depend on American technology and threatening broad penalties, including a 100% duty increase on Chinese imports

starting on November 1, according to Reuters.

In addition to trade restrictions on high-tech and minerals, US officials are pressuring Beijing to start buying more American agricultural products again, particularly soybeans, which have practically disappeared from recent Chinese imports, harming American farmers and the country's agricultural electoral base.

What to expect from the talks

The likelihood of a major agreement re-establishing previous trade links is acknowledged by both parties. Instead, they are focused on designing a strategic pause—for instance, a limited tariff relief, an extension of current rates, or modest commitments to resume agricultural purchases.

If they are unable to reach an agreement, Trump has threatened to increase tariffs on Chinese goods to a total of about 155% starting on November 1. Beijing would almost surely react to that, ending the truce that has halted tit-for-tat hikes.

If a deal is made now, it will probably be limited and temporary. Observers warn that the trade truce struck earlier this year may fall apart if no agreement is reached, with the prospect of a sharp escalation to triple-digit tariff levels once more.

“Trump will not go to 100% tariffs. The Chinese will back away a little bit from the proposal that rare earths exports to defence sectors around the world will not happen,” said Dennis Wilder, a senior fellow at Georgetown University's Initiative.

Regional and Global Stakes

The fact that the negotiations are being held in Kuala Lumpur highlights the broader regional implications as both powers rely heavily on Southeast Asia as a supply-chain centre. The talks cover topics such as defence technology, influence throughout Asia, and the durability of global supply chains alongside bilateral trade.

The Trump administration is under pressure to show that it can negotiate after enacting broad tariffs and high-tech limitations for the United States. China, however, is hesitant to give up too much because it considers its rare-earth regulations as a strategic and economic tool.

Both sides appear driven to prevent a relapse into trade war terrain. As China economics expert Scott Kennedy put it, “If they make a deal, their gambit will have paid off. If there is no deal, then everyone will need to prepare for things to get much worse.”