Busan: The United States and China have taken early steps to reduce tensions in their ongoing trade dispute, but both sides still face major challenges before they can reach lasting stability.

The recent friction began when President Donald Trump increased tariffs on a wide range of Chinese goods earlier this year, arguing that Washington needed to protect its industries and reduce reliance on China. Beijing responded with its own tariffs and restrictions, including curbs on key minerals used in technology and defence manufacturing.

After weeks of pressure on businesses and global supply chains, the two leaders met in Busan, South Korea, at the end of October. The meeting produced a limited truce. Washington agreed to slightly lower tariffs on Chinese imports while Beijing paused some of its restrictions on rare earth exports. China also signaled that it would restart large purchases of American farm products, including soybeans, a move welcomed by US farmers.

A White House note earlier this month confirmed these decisions and described them as a step toward calming the trade environment. However, several sensitive issues remain unsettled. The United States is still considering changes to its export controls on advanced technology, including powerful artificial intelligence chips. Beijing, meanwhile, continues to hold a strong position in rare earth supplies, which many countries depend on for electronics and green energy production.

Global trade observers say the situation is still fragile. The World Trade Organization recently cautioned that a deeper breakdown between the United States and China could reduce global economic output in the coming years. Many companies are watching closely as they plan production and sourcing for 2026.

Officials from both countries have held follow up talks in recent weeks, but analysts believe any long term deal will require difficult compromises on technology, supply chains and industrial support.

For now, the truce has offered some relief to markets, but the path ahead remains uncertain as the world waits to see whether the United States and China can move past confrontation toward a more stable trade relationship.