The United States and China have reached a broad framework for a trade agreement ahead of a meeting between President Donald Trump and President Xi Jinping this week, a development that removes the immediate threat of a sharp escalation in tariffs between the world's two largest economies.
US Treasury Secretary Scott Bessent said the framework avoids the 100 per cent additional tariffs on Chinese goods that had been scheduled to take effect on 1 November, while China postpones its rare earth export controls for one year and resumes purchases of US soybeans.
The framework was worked out during high-level talks on the sidelines of the ASEAN Summit in Kuala Lumpur. Bessent and US Trade Representative Jamieson Greer met Chinese Vice Premier He Lifeng and top trade negotiator Li Chenggang for their fifth round of in-person discussions since May.
Bessent said he expects China to delay implementation of its rare earth minerals and magnets licensing regime by a year while the policy is reconsidered. He also anticipates that a tariff truce with China will be extended beyond its 10 November expiration date, and that China will revive substantial purchases of US soybeans after buying none in September while favouring soybeans from Brazil and Argentina.
Chinese officials were more circumspect about the talks and offered no details about the outcome, according to reports of the meetings.
For American businesses, the framework reduces the risk of a sudden jump in import costs at the start of November. For manufacturers, a pause in rare earth controls matters because those minerals are essential for high-tech goods, electric vehicles and defence equipment.
For US farmers, the return of Chinese soybean purchases could be significant. China had been the largest buyer of American soybeans, and the loss of that market in September put pressure on farm incomes across the Midwest.
Markets have already responded positively: as expectations grew for a US-China trade agreement, the S&P 500 surpassed 6,800 for the first time in history.
Trump and Xi are due to meet on Thursday on the sidelines of the Asia-Pacific Economic Cooperation (APEC) summit in Gyeongju, South Korea, to sign off on the terms. While the White House has announced the talks, China has yet to confirm that the two leaders will meet.
The framework is not yet a final deal. Details on fentanyl cooperation, the TikTok ownership transfer and the length of the tariff truce still need to be settled by the two leaders.
Will 100% tariffs on Chinese goods start on 1 November? According to Bessent, no — the framework eliminates that threat, subject to final agreement by Trump and Xi.
What are rare earth export controls? They are licensing rules on minerals and magnets used in electronics, clean energy and defence. A one-year pause would ease supply pressure on manufacturers.
Why do US soybean farmers care? China had stopped buying US soybeans in September. Resumed purchases would restore a major export market for American growers.
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