The United States and China have agreed on a framework for a comprehensive trade deal, signaling a potential de-escalation in their economic tensions ahead of a key meeting between Presidents Donald Trump and Xi Jinping later this week. This development, reached during negotiations in Malaysia, aims to avert further escalation in the trade war and addresses critical issues like tariffs, rare earth exports, and agricultural trade.
The breakthrough occurred on the sidelines of the Association of Southeast Asian Nations (ASEAN) summit in Kuala Lumpur, where US Treasury Secretary Scott Bessent met with senior Chinese trade officials. Both sides described the discussions as constructive, resulting in a substantial framework that sets the stage for Trump and Xi to finalize details in their upcoming meeting in South Korea. Bessent confirmed that the agreement includes resolving long-standing disputes and avoiding the implementation of threatened tariffs, which had raised concerns about global economic stability.
A central element of the framework is the resolution of the TikTok dispute, with a deal agreed for the app’s US operations to be controlled by American companies, including six out of seven board seats. Additionally, China has committed to delaying tightened controls on rare earth exports for one year, providing relief to US manufacturers who rely on these materials for electronics production. This deferral addresses one of Trump’s key grievances, as China processes around 90% of the world’s rare earths, making it a strategic bargaining chip in the trade war.
On tariffs, Bessent stated that the threatened 100% levy on Chinese goods, scheduled for November, will likely be averted as part of the deal. He expressed confidence that the framework would prevent further tariff escalations, which Trump had imposed arguing they would boost US manufacturing and jobs. In return, China is expected to resume substantial purchases of US soybeans, ending a boycott that had hurt American farmers. Bessent, who is a soybean farmer himself, emphasized that this aspect of the agreement would address farmers’ concerns and benefit the agricultural sector for seasons to come.
The trade tensions escalated earlier this month when Trump threatened the additional tariff in response to China’s rare earth restrictions, accusing Beijing of hostility and trying to hold the world “captive.” China had hit back with its own measures, but both nations agreed to pause implementation while pursuing a deal. The framework now aims to stabilize relations, with the Chinese government stating that both teams reached a basic consensus on arrangements to address their respective concerns and agreed to further finalize specific details.
In parallel, the US announced several trade agreements with Southeast Asian countries, including Malaysia, Cambodia, Thailand, and Vietnam, as part of Trump’s Asia tour. These deals involve critical minerals and agricultural goods, expanding US access to resources beyond China and reinforcing economic partnerships in the region. Trump emphasized the US’s commitment to being a strong partner, noting that tariffs of up to 20% would remain but could include exemptions for certain products, helping mitigate the impact on trade-dependent nations.
The upcoming meeting between Trump and Xi in South Korea on Thursday is expected to “consummate” the trade deal, as Bessent described it, with both leaders reviewing and finalizing the framework. The White House has expressed optimism about reaching a comprehensive agreement, which would mark the first face-to-face interaction between Trump and Xi since Trump’s return to office. This high-stakes diplomacy comes amid global concerns over trade wars and their effects on supply chains and economic growth.
Overall, the framework agreement represents a significant step toward reducing US-China trade tensions, which have far-reaching implications for the global economy. By addressing key issues like tariffs, rare earths, and agricultural trade, it could pave the way for more stable bilateral relations. However, the success of the deal will depend on the final details and implementation, with observers watching closely for any shifts in policy or further negotiations in the coming weeks.