In a move that has the potential to redefine the direction of international trade, China and the United States have signed an initial framework for a comprehensive trade agreement. The deal, hammered out in two frenetic days of negotiations in Malaysia, addresses some of the most volatile issues between the two superpowers — from exporting rare earth and importing soybeans to threatening tariffs and technology transfer.
The news followed US Treasury Secretary Scott Bessent, US Trade Representative Jamieson Greer, and Chinese Vice Premier He Lifeng, who were accompanied by trade negotiator Li Chenggang, holding meetings. Both sides characterized the talks as constructive and significant, representing the most upbeat tone in months of tense economic negotiations.
The Deal in Motion
Central to the framework is a shared compromise:
China will put its new regime of licensing limiting the export of rare earth products on hold.
The US will put plans for 100 percent tariffs on Chinese imports, set to become effective on November 1, on hold.
The decision marks a calculated break in a trade war that has time and again shaken up supply chains and global commodity markets. For American farmers, there is a bonus too — Beijing has promised to restart huge-scale US soybean buys, a saving grace for an agricultural industry badly battered by the long-standing tariff war.
A Shift in Tone
The rare earths dispute flared up at the beginning of this month when Beijing rolled out new export controls on material essential to high-tech production, defense systems, and renewable technologies. The threat of retaliatory tariffs by Washington added to fears of a resumed trade war.
Now, both capitals are easing back from the edge. The new framework lays the ground for a more enduring economic relationship that goes beyond commodities. It paves the way for future negotiations on fentanyl regulation, export controls, and technology transfers, including a possible resolution of the TikTok ownership issue.
Diplomacy at Work
The framework was agreed on the margins of the ASEAN Summit in Kuala Lumpur, where President Donald Trump also inked smaller trade agreements with Cambodia, Thailand, and Malaysia.
Trump is now set to see Chinese President Xi Jinping in South Korea on October 30, where both leaders will consider and potentially approve the initial trade plan. A subsequent meeting in Beijing is also under consideration prior to the Lunar New Year in February, indicating both sides are seeking stability prior to 2025’s global economic schedule.
Trump called the progress “a major step toward balanced trade and fair cooperation,” indicating hope that the deal would mitigate longstanding tensions over market access and industrial policy.
From Trade War to Trade Reset
The US and China have been trapped in a cycle of trade truces and retorsions since 2018. Previous ceasefires — most significantly this year’s May and August truces — provided brief respite but did nothing to deter additional sanctions and export restrictions. The current round of talks, however, is more extensive, aiming not only at tariffs but also the structural factors of the dispute.
Economists describe the emphasis on rare earths as evidence of the way that the US is attempting to protect key supply chains that underpin everything from semiconductors to electric cars. Meanwhile, the willingness of China to increase soybean imports is seen as a pragmatic concession to relieve US domestic pressure before the next election cycle.
Global Stakes
A successful transaction would have good ripples across global markets that have been in suspense over uncertainty in the US-China relationship. The rare earth industry, for instance, experienced a surge in prices over recent weeks amid concerns over a shortage of supply. Likewise, American farm exports have experienced volatility based on changes in Chinese buying patterns.
Trade experts say the preliminary deal could be the start of a fresh strategic equilibrium — one that underscores economic coexistence over confrontation. But they also advise that actual implementation is uncertain until both presidents formally sign off on the terms.
What’s to Come
The trade ceasefire in effect now is to run out on November 10, but both sets of negotiators indicated an extension was likely subject to presidential approval.
If the model works, it may be the template for a wider economic agreement that tackles long-term problems like export controls, fentanyl controls, and access to technology.
Hesitation remains, however. Beijing still hasn’t formally approved details of the Trump-Xi summit, and previous rounds of hope have disintegrated amid political and strategic stress.
For the moment, at least, the music has changed — from tariff threats to conversation about cooperation.
Why It Matters
Global Supply Chains: A temporary ease in rare earth limits might stabilize production for electronics, defense, and clean technology.
Farmers’ Relief: Increased soybean imports could support American agriculture after years of doubt.
Market Confidence: Steer clear of additional tariffs and possibly infuse confidence into investors while easing global inflationary pressure. https://www.msn.com/en-us/money/markets/us-china-tee-up-sweeping-trade-deal-for-trump-xi-to-finalize/ar-AA1PbTdq?ocid=BingNewsVerp
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