After two days of talks in Spain, U.S. and Chinese trade delegations reached a basic agreement on 15th (local time). Expectations are rising for a U.S.-China summit as U.S. President Donald Trump and Chinese President Xi Jinping are set to finalize the deal after a phone call on the 19th. However, before the summit can take place, there are many issues to resolve, including imports of U.S. soybeans, distribution of fentanyl precursors, and sanctions on Russian crude oil.
According to the Wall Street Journal (WSJ) on 15th, one of the key reasons the Spain talks produced a tangible outcome—"the sale of TikTok's U.S. business license"—and reached agreement was the anticipation of President Trump's visit to China. China had pushed back against U.S. demands to sell TikTok's domestic business license, but it is highly likely Beijing agreed in order to have the forthcoming U.S.-China summit held not in a third country but in China.
WSJ interpreted China's disclosure, as the talks began the day before, of Nvidia's antitrust violations and its mention of further probes as an "action" to quell domestic concerns about giving up TikTok to secure President Trump's visit to China. In fact, China's antitrust authority, the State Administration for Market Regulation, said the day before that it had "confirmed Nvidia's violations of the antitrust law and will conduct additional investigations," but it did not disclose specifics of the violations or any plans for sanctions such as a penalty surcharge. WSJ said, "This round of talks is part of an attempt to lay the groundwork for a U.S.-China summit at the end of this year."
The sticking point is where to hold the U.S.-China summit. The United States is considering Korea, where the Asia-Pacific Economic Cooperation (APEC) summit will be held in October, while China is reportedly pushing for a bilateral summit on its own soil. Although there are uncertainties at multilateral diplomatic venues held abroad, the explanation is that hosting and managing the event domestically allows it to proceed as a bilateral meeting while showcasing national power.
According to the report, for this reason Chinese Premier Li Qiang has been dispatched to the United Nations (UN) General Assembly this month to lobby senior U.S. officials. As a gift to secure President Trump's visit to China, Li is expected to offer Xi's attendance at next year's G20 Leaders Summit on Finanical Markets and the World Economy (to be hosted by the United States).
However, there are many differences to bridge before a summit can be realized. Not only are the two countries exchanging sanctions on corporations tied to their core industries, they are also continuing trade retaliation over fentanyl, soybeans, and Russian crude oil.
First, the United States has imposed an additional 20% tariff while demanding that China eradicate the distribution of chemical substances used to synthesize the drug "fentanyl," which has caused a serious social problem domestically, and China has for years demanded that the United States lift this tariff first, fueling conflict. The fentanyl issue was expected to be discussed further in these talks, but it did not make the core agenda.
The suspension of imports of U.S. soybeans has also emerged as a new axis. China, the biggest customer for U.S. agricultural products and the world's largest soybean importer, is holding soybean purchases as a bargaining chip. Ahead of the fall harvest season, China halted purchases of U.S. soybeans, causing prices in the United States to plunge and putting many farms in crisis. President Trump pressed China last month to quadruple its purchases of U.S. soybeans, but China's import volume has been slow to increase.
The United States has also been threatening tariffs over China's recent imports of Russian crude oil. On 13th, President Trump urged members of the North Atlantic Treaty Organization (NATO) to impose tariffs of 50% to 100% on China for importing Russian crude oil. In response, a Spokesperson for China's Ministry of Commerce said the day before, "Imposing secondary tariffs to pressure relevant countries under the pretext of purchasing Russian crude oil is harassment and economic coercion," adding, "This seriously violates matters agreed in the currency between the U.S. and Chinese leaders. China firmly opposes this."