When Donald Trump and Xi Jinping met in Busan, South Korea on October 30, the Chinese leader called Trump a ‘helmsman’ and praised his statesmanship. You might wonder if Xi was being sincere or simply trying to be polite. After all, this is the same Trump who threatened 100 percent tariffs just weeks earlier, only to settle for a truce that, according to industry sources, brought tariff levels down to roughly 47 percent on Chinese goods and 33 percent on American products.
Perhaps the sweet talk worked. China agreed to pause rare earth export controls, curb fentanyl precursor chemicals flowing into the United States, and buy American soybeans. In return, Washington suspended port fees on Chinese ships and relaxed the 50 percent rule barring exports to companies majority-owned by restricted Chinese entities.
While Xi has praised other leaders during tense summits, Dennis Wilder, a former senior US national security official, noted he had never heard Xi flatter an American president before. Alexander Campbell, formerly of Bridgewater Associates, estimates that due to China’s property crisis, its banks need a lifeline of roughly US$1 trillion each year, supported by a trade surplus of similar size. This is existential, almost life-or-death economics.
Trump’s chaos-as-strategy forced China to reveal its strongest card: rare earth minerals. Beijing controls roughly 69 percent of rare earth mine production and more than 90 percent of processing capacity, according to the latest industry reports. By making its restrictions global rather than bilateral, China scared other countries into seeking alternatives.
For Philippine businesses, the Trump-Xi dance offers uncomfortable lessons. The Philippines exported tens of millions of metric tons of nickel ore to China in 2024, accounting for the vast majority of our nickel exports, according to industry estimates. That concentration leaves our mining sector extremely exposed if China cuts steel production to manage its property crisis and trade pressures, potentially causing sharp revenue drops, layoffs, and long-term supply chain disruptions for Philippine exporters. Nickel prices have remained narrowly trapped for months amid trade tension, translating into revenue uncertainty for Nickel Asia, Global Ferronickel, and every mining operation in Surigao and Palawan.
The semiconductor sector faces similar exposure. Electronics products account for a significant share of our exports, and the Semiconductor and Electronics Industries in the Philippines expects only modest growth in 2025, reflecting ongoing global competition, supply chain disruptions, and tariff uncertainties.
That projection predates Trump’s discussions of additional tariffs on microchips. When Trump and Xi trade blows, our assembly and testing facilities risk losing orders as supply chains fragment.
The business response should be immediate. Nickel exporters need to lock 3-to-5-year supply contracts with Japanese and South Korean steel mills before the next trade escalation. These contracts should include price floors tied to London Metal Exchange benchmarks to hedge against volatility, so companies can price ore properly instead of shipping raw ore at commodity rates while China captures the processing premium.
Yes, diversifying suppliers and buyers means upfront outlays, but getting caught in the tariff crossfire costs more.
These tactical moves reflect a deeper lesson: predictability costs money when dealing with China. When the Philippines won its arbitral case over the South China Sea in 2016, China ignored it and continued building artificial islands. Duterte then spent six years seeking Chinese investment, receiving promises for infrastructure projects. China delivered two projects, both incomplete.
When Indonesia banned nickel ore exports in 2020 to force domestic processing, China scrambled for alternative suppliers. The Philippines could have used that moment to negotiate better terms: processing partnerships, technology transfers, or higher prices for refined products rather than shipping raw ore.
Instead, Manila kept shipping ore at commodity rates while Indonesia built a $22 billion nickel processing industry. We have leverage but refuse to use it, fearing Chinese retaliation. Yet we experience Chinese economic pressure anyway. China reduced Philippine banana imports by roughly 39 percent in 2024, according to preliminary government reports. Being predictably cooperative did not protect our exporters.
The window for adaptation narrows as Trump and Xi maneuver toward their next confrontation. Wilder sees the current truce as a ‘tactical pause’ with details pending. Philippine businesses should prepare for renewed turbulence rather than assume stability will return.
China responds to leverage and uncertainty more than it responds to patience and protocol. Trump forced Beijing to show its rare earth card prematurely, accelerating global diversification efforts. The Philippines should study that sequence instead of repeating Duterte’s mistake of assuming goodwill produces results. We have tried cordial relations for years. The Philippine trade deficit and empty Chinese promises speak for themselves-deceptively quiet, vicious in impact.