Why in news?

At the Asia-Pacific Economic Cooperation (APEC) summit in South Korea, US President Donald Trump and Chinese President Xi Jinping met for the first time since Trump’s return to office.

Trump announced that China agreed to maintain global exports of rare earth minerals under a one-year deal, calling it a “worldwide solution.” He said this would remove supply worries for industries dependent on these materials.

Additionally, the US will reduce tariffs on China—cutting the penalty on fentanyl-related trade from 20% to 10%, bringing the overall tariff rate down from 57% to 47%.

What’s in Today’s Article?

• Key Highlights of the Xi-Trump Meeting
• Implication for India in the G-2 world

Key Highlights of the Xi-Trump Meeting

• The meeting was its carefully managed optics. Unlike his usual confrontational style, President Trump adopted a polite and diplomatic tone, showing awareness of China’s global influence.
• Interestingly, China did not immediately release an official account of the meeting, highlighting its cautious approach.
• Trump’s Recognition of China’s Power
  • Trump referred to the meeting as “G-2”, equating the US–China relationship to elite global groupings like the G-7 and G-20.
  • This was seen as a symbolic recognition of China’s global power, something no previous US president had done publicly — a clear diplomatic win for Beijing.
• Controlled Diplomacy Over Confrontation
  • Both leaders showed mutual deference and restraint, a departure from Trump’s usual brashness.
  • Their conduct reflected a shared understanding of the delicate balance between the world’s two largest economies and the global impact of their relationship.
• Deal on Rare Earth Exports
  • The key takeaway from the Trump–Xi meeting was about rare earth exports.
  • President Trump announced that China had agreed to continue exporting rare earth minerals for one year — a relief for global industries that depend on them.
  • In return for China’s cooperation, Trump cut tariffs on Chinese goods by 10%, lowering total US tariffs from 57% to 47%.
  • This move was meant to ease pressure on Chinese businesses and encourage Beijing to compromise.
  • While the agreement eased tensions, it only postponed the core issue — China still dominates the rare earth supply chain.
  • The deal gives the US and its allies more time to diversify sources and reduce dependency on China.

Implication for India in the G-2 world

• In his first term (2017), Trump took a hard stance on China, calling it a strategic rival, strengthening alliances, and supporting frameworks like the Quad and Indo-Pacific strategy, where India played a central role.
• Now, in his second term, Trump’s approach is commercial, focusing on trade deals and domestic investments, even pressuring allies like Japan and South Korea to invest heavily in the US.
• After the meeting, US President left behind a sense of uncertainty about America’s future with China — the world’s two largest powers.
• Calling his meeting with Xi Jinping a “G-2” summit, Trump sparked concern among allies that the US is leaning toward a China-first, business-focused policy.
• Implications for India and the Region
  • For India, the message was clear: the US focus remains on managing China.
  • The question now is whether Trump prefers working with allies like India, Japan, and Australia (under the Quad) or handling China alone.
  • For India and other Asian nations, this marks a new phase in US–China relations — a mix of competition and cooperation.
• Trade Disadvantage for India
  • After Trump reduced tariffs on China to 47%, India now has the highest tariff rate at 50%, putting it at a trade disadvantage.
  • This makes a US–India trade deal more urgent.
  • Until then, a US rival (China) enjoys better trade terms than a US partner (India).
• India’s Strategic Path Forward
  • As Trump’s trade-driven strategy reshapes the region, India must rethink its assumptions about both American intent and Chinese ambition, while identifying space for its own strategic autonomy.
  • For India, the challenge is to navigate this shifting US–China balance with agility.
  • Delhi must:
    • Engage the US where interests align,
    • Explore economic opportunities with China where possible, and
    • Deepen partnerships with Asia and Europe to strengthen its independent position.