October 30, 2025: Trump and Xi Meet at APEC Summit in South Korea

The Asia-Pacific Economic Cooperation (APEC) Summit, held in the South Korean city of Gyeongju from October 27 to November 1, 2025, quickly deviated from its intended purpose of strengthening multilateral trade. Instead, the gathering became a crucial venue for addressing critical bilateral conflicts. The centerpiece of the global focus was the first in-person meeting between US President Donald Trump, who began his second presidential term on January 20, 2025, and Chairman Xi Jinping of the People's Republic of China.

While international attention centered on the temporary cooling of the US-China trade disputes, the host nation, South Korea, found itself struggling with an unexpected and serious financial impasse involving its key ally, Washington.

I. A Temporary Truce in the Rare Earth Conflict

The primary factor that had recently strained relations between the two global superpowers was China's stringent tightening of export restrictions on Rare Earth Elements (REEs). These 17 critical minerals are essential for high-technology industries, including the manufacture of microchips and military equipment. Beijing, which controls approximately 85% of the world’s REE processing capacity, has wielded this resource as a powerful geopolitical tool.

In retaliation, the Trump administration had threatened the imposition of additional 100-percent tariffs on Chinese imports. Yet, immediately preceding the summit, the two sides managed to secure a framework agreement that temporarily halts both the anticipated American duties and the Chinese export limitations.

US Treasury Secretary Scott Bessent confirmed that the threat of 100-percent tariffs was "effectively off the table," noting that this aggressive posture had provided negotiators with significant leverage.

The financial markets responded swiftly to the de-escalation of tensions. Shares of US mining companies focused on REE extraction, including MP Materials, Trilogy Metals, and USA Rare Earth, experienced drops ranging from 4.7% to 8.3%. This decline signals a temporary reduction in the market premium previously attached to "secure" (non-Chinese) supply sources.

It is noteworthy that two days before his scheduled meeting with Xi Jinping, President Trump signed a framework agreement for cooperation on critical minerals with Japanese Prime Minister Sanae Takaichi. This action is part of a wider, long-term strategy to forge geopolitically secure supply chains, which also involves partnerships with Australia and Malaysia.

II. The Critical Deadlock in ROK–US Relations

The most acute conflict at the APEC sidelines unfolded between the two allies. Negotiations over a proposed South Korean investment package of 350 billion US dollars into the American economy—designed to reduce tariffs on Korean exports from 25% to 15%—have reached a critical deadlock.

South Korean President Lee Jae-myung publicly declared that the "method of investment, the amount of investment, the timeline, and how we will share losses and distribute dividends—all of this remains a subject of dispute."

Key disagreements center on the financial structure of the fund and the Trump administration's explicit demand for an upfront payment in cash. ROK National Security Advisor Wi Sung-lak stated unequivocally that Seoul "objectively and realistically cannot pay 350 billion dollars in cash."

Moreover, Seoul is pushing for the inclusion of a currency swap mechanism in the agreement. The Bank of Korea has issued a warning that annual obligations surpassing 20 billion dollars could severely destabilize the Korean won (WON).

President Lee warned that Seoul would not ratify any deal that would inflict "catastrophic damage on South Korea." This ongoing impasse poses an immediate threat to Korean exporters, as the delay risks reverting US tariffs on Korean imports back to the 25-percent rate.

III. Diplomatic Balancing and Regional Security

Amidst the flurry of trade negotiations, the Gyeongju summit also raised pressing regional security questions. President Trump expressed a willingness to engage in dialogue with North Korean leader Kim Jong Un, should the latter show interest. While US officials attempted to minimize speculation about an immediate meeting, this statement caused renewed concern among allied nations.

Analysts observe that any potential partial lifting of sanctions on the DPRK in exchange for limited denuclearization steps might provoke South Korea and Japan to demand permission to develop their own nuclear weapons capabilities.

Thus, for South Korea, which also had a meeting scheduled between President Lee Jae-myung and Chairman Xi Jinping, the APEC summit became a severe test of "pragmatic diplomacy." The country is forced to balance Washington’s aggressive trade stance, its primary ally’s demands for "alliance modernization" (i.e., assuming a greater share of the defense burden), and the necessity of preserving crucial economic ties with Beijing.

The results of the high-stakes negotiations conducted in Gyeongju are expected to have a profound and long-term impact, not only on the trajectory of global commerce but also on the stability of alliances throughout the entire Indo-Pacific region.