The United States and China agreed to a framework for a trade deal just days before Donald Trump met with Chinese President Xi Jinping.
Treasury Secretary Scott Bessent said the deal, reached on the sidelines of the Association of Southeast Asian Nations (Asean) summit in Malaysia on Sunday, would remove the threat of 100% tariffs on Chinese imports from November 1 and include “a final deal” on the sale of TikTok to the United States.
Trump arrived in Malaysia on Sunday for the summit, his first stop on a five-day tour of Asia that is expected to culminate with a face-to-face meeting with Xi in South Korea on Thursday.
After the discussions, the US president adopted a positive tone, declaring: “I think we will reach an agreement with China.”
Bessent said China said it would “delay” export controls on minerals used in fighter jets, smartphones and electric vehicles for a year as part of the truce.
China’s top trade negotiator, Li Chenggang, said the two sides had reached a “preliminary consensus” and would then go through their respective internal approval processes.
“The US position has been tough,” Li said. “We have had very intense consultations and engaged in constructive exchanges to explore solutions and arrangements to address these concerns. »
There were also hopes of a truce between the United States and Brazil after what President Luiz Inácio Lula da Silva called a “positive” meeting with Trump in Malaysia. Their respective teams will “immediately” begin discussing pricing and other issues, he said.
A US-China deal reduces the risks of a global trade war that would threaten car production in Europe and the UK.
It comes after months of escalating trade tensions between the two economic superpowers, sparked by Trump’s announcement of “Liberation Day” tariffs outside the White House in April.
With days before the end of the current tariff truce, Xi has shown that he has no intention of submitting to Trump’s threats of 100% tariffs.
Instead, he turned the screw on the United States, imposing controls on exports of rare earth minerals, including magnets, an essential element used for electronic windows and car trunk releases.
Trump accused Beijing, which controls 60% of global production and 90% of rare earth refineries, of “becoming very hostile” and trying to hold the world “captive.”
Beijing also hit the US agricultural sector hard by stopping purchasing soybeans from the United States. China is the US’s biggest customer for soybeans, importing half of the country’s $24bn (£18bn) exports in 2024.
“I think we have a very effective framework for leaders to talk on Thursday,” Bessent told reporters after he and U.S. Trade Representative Jamieson Greer met with Chinese Vice Premier He Lifeng and Li for their fifth round of in-person talks since May.
Bessent said he anticipated the tariff truce with China would be extended beyond its Nov. 1 expiration date and that China would restart substantial purchases of U.S. soybeans after buying none in September and instead source from Brazil and Argentina.
U.S. soybean farmers “will feel very good about what’s going to happen both for this season and for seasons to come for several years” once the terms of the deal are announced, Bessent told ABC.
Greer said both sides agreed to suspend some punitive actions and find “a path forward where we could have more access to rare earths from China and try to balance our trade deficit with sales from the United States.”
Tensions between Brazil and the United States have also escalated since August, when Trump increased tariffs on imports of most Brazilian goods from 10% to 50% in August.
“We agreed that our teams would meet immediately to advance the search for solutions to the tariffs and sanctions against the Brazilian authorities,” Lula said in a social media post after the meeting.
Trump had linked the tariff decision to what he called a “witch hunt” against Jair Bolsonaro, the South American country’s former president.
