The United States and China have agreed the framework of a trade deal that would pause a threatened 100 percent American tariff on Chinese goods and delay Beijing’s controls on rare earth exports, easing a standoff that had rattled markets and supply chains around the world. The agreement was reached by senior economic officials meeting on the sidelines of the ASEAN Summit in Kuala Lumpur, and now goes to Presidents Donald Trump and Xi Jinping for final approval at a meeting later this week.
US Treasury Secretary Scott Bessent, who led the American delegation alongside US Trade Representative Jamieson Greer, described the talks as very successful. He said the framework eliminated the threat of the 100 percent tariffs that had been due to take effect on November 1, and that China would delay implementation of its rare earth minerals and magnets licensing regime by a year while the policy is reconsidered. Chinese officials, by contrast, were more circumspect about the talks and offered no details of their own about the outcome, a difference in tone that underlined how much of the deal remains to be confirmed by the two leaders.
The framework also covers a resumption of Chinese purchases of American soybeans, a point of particular importance to farmers in the US Midwest, who have watched a major export market shrink during the trade dispute. Soybean sales had become one of the most politically sensitive parts of the confrontation, and American officials presented their resumption as a significant win for agricultural producers.
What the framework covers
At its core, the framework is a pause rather than a final settlement. The United States will not impose the additional 100 percent tariff on Chinese imports that President Trump had threatened, and China will hold off on the export licensing regime for rare earths and magnets that had alarmed manufacturers in the United States, Europe and Japan. Rare earths are a group of minerals essential to electric vehicles, semiconductors, wind turbines and military equipment, and China dominates their processing worldwide, which is what gave Beijing’s controls such leverage.
According to Bessent, the delay in the rare earths regime will last for one year, giving both sides time to negotiate a longer-term arrangement. The framework was hammered out in a fifth round of in-person discussions since May between Bessent and Greer on the American side and Chinese Vice Premier He Lifeng and top trade negotiator Li Chenggang on the other. Bessent told reporters after the meeting that he believed the two sides had a very successful framework for the leaders to discuss.
The leaders are due to meet on Thursday on the sidelines of the Asia-Pacific Economic Cooperation summit in Gyeongju, South Korea, to sign off on the terms. While the White House has announced the meeting, China had not, at the time of writing, publicly confirmed that Xi would attend, and officials in Beijing offered no detail on what had been agreed. That caution is a reminder that frameworks of this kind have unravelled before, and that the final shape of the deal will only be clear once both leaders have spoken.
Markets welcome the pause
Financial markets responded to the prospect of a deal with enthusiasm. Expectations of an agreement helped push all three major American stock indexes to record closing highs, with the S and P 500 passing 6,800 points for the first time. For businesses that depend on cross-border supply chains, even a temporary pause in tariff escalation brings a measure of relief after months of uncertainty over costs and delivery schedules.
How the standoff escalated
The current dispute has its roots in a long-running contest over trade, technology and economic security between the world’s two largest economies. Tensions sharpened when China expanded licensing requirements on rare earth exports, a move that Washington read as an attempt to use control of critical minerals as negotiating leverage. President Trump responded by threatening a 100 percent additional tariff on Chinese goods from November 1, alongside American export controls on critical software, raising the prospect of a sharp escalation just as the global economy was already absorbing higher costs.
The threat rattled markets. In the run-up to the Kuala Lumpur talks, world stock markets had nonetheless climbed to records on hopes of a breakthrough, a pattern that reflected both optimism about a deal and anxiety about what failure would bring. American farmers, meanwhile, found themselves at the centre of the dispute. China, the world’s largest soybean buyer, had sharply reduced purchases of American soybeans, leaving growers facing a large harvest with a diminished export market.
The framework attempts to address both pressures at once. By pausing the tariff threat and the rare earths controls together, it gives each side something it wanted: Washington avoids a new round of import taxes that would have raised prices for American consumers and businesses, while Beijing secures a path back to negotiations without immediately surrendering its controls. Whether that balance holds will depend on the detailed commitments that follow the leaders’ meeting, including how the soybean purchases are structured and how the rare earths licensing pause is implemented in practice.
The talks also touched on other long-running issues, including fentanyl, agricultural trade and the future of the short-video app TikTok, which Washington has sought to bring under American-controlled ownership. Those items illustrate how broad the US-China economic relationship has become, and how difficult it is to separate any single dispute from the wider contest over technology and influence.
What happens next
The immediate test comes at the leaders’ meeting in South Korea, where Trump and Xi are expected to confirm the framework and set the terms for turning it into a detailed agreement. Officials on both sides will then need to translate broad understandings into written commitments, with questions remaining over the duration of the rare earths pause, the scale and timing of soybean purchases, and the treatment of other tariffs and controls that remain in place.
Businesses will be watching for specifics. A framework that pauses escalation is welcome, but manufacturers that rely on rare earths and American farmers planning next season’s crops both need clarity on volumes, timelines and enforcement before they can make firm decisions. Analysts also caution that the underlying disagreements over technology, market access and intellectual property have not been resolved, and could resurface quickly if implementation stalls.
For now, though, the framework represents a step back from the edge. Both governments have an incentive to present the leaders’ meeting as a success, and the pause gives negotiators breathing space that did not exist a week ago. The coming days will show whether that breathing space produces a durable agreement, or simply delays the next confrontation.
