Trump announces trade breakthrough with South Korea on Asia trip

Arriving from Tokyo hours after North Korea test-fired a nuclear-capable cruise missile, Trump received a lavish reception from Lee in Gyeongju, a historic city hosting this year's Asia-Pacific Economic Cooperation forum.

His talks with Xi are set for Thursday in the port city of Busan.

Speaking earlier to reporters aboard Air Force One en route to South Korea, Trump dismissed the North Korea missile test and said he was squarely focused on his meeting with the leader of the world's second-largest economy.

"I think we're going to have a very good outcome for our country and for the world, actually," Trump said.

He expects to reduce U.S. tariffs on Chinese goods in exchange for Beijing's commitment to curb exports of fentanyl precursor chemicals, he added.

The United States could halve the levies of 20% on Chinese goods it now charges in retaliation for the export of such chemicals, the Wall Street Journal said.

China's foreign ministry said the meeting of the two leaders would "inject new momentum into the development of U.S.-China relations", and Beijing was ready to work together for "positive outcomes".

SOUTH KOREA TRADE TALKS STRUGGLE

Speaking at a summit of APEC CEOs in Gyeongju before his meeting with Lee, Trump said a trade deal with South Korea would be finalised "very soon", though officials on both sides have been downplaying the prospect of a breakthrough this week.

The allies unveiled a deal in late July under which Seoul would avoid the worst of the tariffs by agreeing to pump US$350 billion of new investments into the United States. But talks over the structure of those investments have been deadlocked.

Meeting Lee at the nearby Gyeongju National Museum, Trump was presented with a gold crown and the "Grand Order of Mugunghwa", the country's highest decoration worn as an elaborate sash and medal.

"I'd like to wear it right now," Trump quipped.

At the start of a working lunch topped off with a "golden dessert", Lee pledged to spend more on defence, as he sought to head off a Trump concern that allies are not pulling their weight militarily.

He also asked that the U.S. allow the country to reprocess nuclear fuel to power submarines. Seoul is barred from doing so without U.S. consent, under a pact between the countries.

Trump pledged to help "straighten out" South Korea's problems with its nuclear-armed northern neighbour. The two are still technically at war after their 1950-53 war ended in an armistice, not a peace treaty.

Trump, who has repeatedly called for a meeting with North Korean leader Kim Jong Un on this trip, said on Wednesday the timings would not work out.

TAIWAN ON THE AGENDA?

Skipping the main APEC summit, Trump plans a dinner with Lee and bilateral meetings with several countries' leaders, including China's Xi, before he departs on Thursday.

Negotiators from the world's top two economies hashed out a framework on Sunday for a deal to pause steeper American tariffs and Chinese rare earths export controls, U.S. officials said. The news sent stocks to record peaks.

Beijing has been more circumspect about the prospect of an agreement, but in a possible sign of thawing, China bought its first cargoes of U.S. soybeans in several months, Reuters reported exclusively on Wednesday.

The lack of Chinese buying has cost U.S. farmers, a key support base for Trump, billions of dollars in lost sales.

Trump said he would also speak to Xi about Nvidia's state-of-the-art Blackwell AI chips, with sales to China a key sticking point in trade talks.

Trump said he did not know whether Taiwan would be discussed with Xi.

Since taking office in January, Trump has vacillated on his position towards the democratically-governed island claimed by China as he seeks to strike a trade deal with Beijing.

Trump says Xi has told him he will not invade Taiwan while the Republican president is in office, but Trump has yet to approve any new U.S. arms sales to Taipei.

Taiwan Foreign Minister Lin Chia-lung said on Tuesday he was not worried that Trump would "abandon" the island in his meeting with Xi.

FINAL STOP IN ASIA TRIP

Trump's trip to South Korea concludes a whirlwind swing through the region, among the hardest hit by his tariff policies and increased U.S.-China competition.

In Malaysia, he announced a slew of trade pacts and oversaw the signing of an expanded truce between Thailand and Cambodia after a border conflict.

In Tokyo on Tuesday, Trump lavished praise on Japan's first female Prime Minister Sanae Takaichi, welcoming her pledge to accelerate a military buildup and signing deals on trade and rare earths.

The U.S. and Japan also released a list of projects in which Japanese companies are eyeing U.S. investments, related to Tokyo's pledge this year of US$550 billion in strategic U.S. investments, loans and guarantees in exchange for a tariff reprieve.

Washington has pressed South Korea for a similar arrangement, but Seoul says it cannot afford to pay the US$350 billion it pledged upfront. Instead, South Korea has offered a mix of phased investments, loans and other measures.