Framework Reached

The US and China agreed on a framework for a potential trade deal ahead of a planned meeting between President Trump and Chinese President Xi Jinping.

Context

Since Trump returned to office, his steepest tariffs were aimed at China, which responded with its own measures. Earlier this month, Trump threatened to impose an additional 100% tariff on Chinese goods in response to China tightening restrictions on rare earth mineral exports. China processes around 90% of the world's rare earths, which are essential components in electronics ranging from solar panels to smartphones. The two countries had previously agreed to pause implementing tariffs while pursuing a trade deal.

Deal Details

On Sunday, Treasury Secretary Scott Bessent met with senior Chinese trade officials in Malaysia and announced that negotiators reached a framework to avoid the threatened 100% tariffs. Bessent told reporters the countries had "reached a substantial framework for the two leaders" and that "the tariffs will be averted."

The Chinese government said both negotiating teams "reached a basic consensus on arrangements to address their respective concerns" and would work to finalize specific details.

Key Components

The framework includes several major elements. China agreed to delay its rare earth export restrictions for approximately one year while re-examining them. The countries also reached what Bessent called a "final deal" on TikTok's US operations, which Trump and Xi will finalize when they meet.

China will resume substantial purchases of US soybeans, addressing concerns from American farmers who have been hurt by China's boycott. Bessent said, "I believe when the announcement of the deal with China is made public that our soybean farmers will feel really good about what's going on for this season and the coming seasons for several years."

Next Steps

Trump and Xi plan to meet Thursday in South Korea during Trump's Asia tour. The two countries also plan to extend their existing trade truce, which is set to expire on November 10, though Trump would make the final decision for the US. The Chinese officials said both sides would need to work out remaining details and get approval from their respective governments before implementing the deal.

The agreed framework represented a significant de-escalation in the trade conflict between the world's two largest economies.