On Sunday, economic officials from China and the U.S. quickly established the groundwork for a trade agreement. This deal involves raising U.S. tariffs and putting a hold on restrictions concerning Chinese rare earth exports, which will be finalized later this week in a meeting between U.S. President Donald Trump and Chinese President Xi Jinping, according to U.S. officials.
Scott Bessent, the U.S. Treasury Secretary, noted that discussions during the ASEAN summit in Kuala Lumpur eliminated the looming threat of President Trump imposing 100% tariffs on Chinese imports starting November 1. He mentioned that he anticipates China will postpone changes to its licensing system for rare earth minerals and magnets for a year.
While Chinese officials maintained a cautious approach, they did not provide specifics about the discussions’ outcomes.
Trump and Xi are scheduled to meet and sign the agreement on Thursday during the Asia-Pacific Economic Cooperation (APEC) summit in Gyeongju, South Korea. Although the White House has confirmed the meeting, there has been no acknowledgment from China regarding the leaders’ discussions.
“I think we have a solid framework for them to discuss,” Bessent mentioned after his fifth in-person meeting since May with China’s Vice Premier He Lifeng and top trade negotiator Li Chengang.
Bessent expressed optimism that the tariff truce with China might extend beyond its November 10 deadline, and that China would start significantly purchasing U.S. goods again. For instance, although China didn’t buy soybeans in September, it chose to purchase from Brazil and Argentina instead.
He added during an ABC appearance that U.S. soybean farmers would likely be pleased with the deal’s terms, positively impacting this season and the following years.
Greer, another official, indicated that both parties had chosen to suspend certain punitive measures. This move appears to create a pathway for increased access to rare earth materials from China while working to balance trade deficits with American products.
Trump’s Optimism Amid Caution from China
China’s Li Chengang described their recent talks as having produced a “preliminary agreement,” which will now move through internal approval channels. He acknowledged that while the U.S. position is challenging, China is steadfastly protective of its rights and interests.
After attending the ASEAN summit, President Trump is set for a five-day trip across Asia, culminating in the highly anticipated meeting with President Xi in South Korea.
Following the weekend discussions, Trump expressed a hopeful outlook, stating, “I believe we will be able to reach an agreement with China.” Previously, he had threatened to launch new tariffs and trade limitations against Chinese goods starting November 1 in response to their new export restrictions on rare earth materials.
China possesses over 90% of the global supply of essential materials needed for various high-tech industries, including electric vehicles and semiconductors. Restrictions on exports, coupled with Trump’s retaliatory threats, could negatively impact the fragile six-month truce that had seen both nations working to lower tariffs.
Aside from rare earths, U.S. and Chinese officials spoke about expanding trade, addressing the U.S. fentanyl crisis, issues related to port fees, and the potential transfer of TikTok ownership to U.S. entities.
Bessent mentioned on NBC’s “Meet the Press” that the two nations must finalize the TikTok agreement for Trump and Xi to “successfully conclude the deal” in South Korea.
Topics of Discussion: Soybeans and Taiwan
During the ASEAN summit, Trump suggested that meetings with Xi could occur in both China and the U.S.
He said, “We have agreed to meet. After this, we will meet in China and in the United States—perhaps in Washington or Mar-a-Lago.” Some key topics for the upcoming discussions involve China’s purchase of U.S. soybeans, the situation surrounding Taiwan—which China views as its territory—and the release of media entrepreneur Jimmy Lai.
Lai’s detention is emblematic of China’s broader crackdown on rights in Hong Kong.
Trump also indicated he would seek China’s cooperation regarding U.S. relations with Moscow amid the ongoing conflict in Ukraine.
Recently, tensions between these two major economies have intensified, with the fragile trade truce established after earlier discussions not sufficiently preventing further conflicts, including sanctions and retaliatory threats.
China’s increase in restrictions on rare earth exports has led to a global scarcity of these materials. In turn, the U.S. is contemplating measures to use software to block exports of a wide range of products, from laptops to jet engines, to China.
