The United States and China have established the groundwork for a potential trade agreement, which will be presented for discussion when their respective leaders convene later this week. This development was announced by the US Secretary of the Treasury.
Scott Bessent informed CBS, the BBC’s US news partner, that the agreement encompasses a definitive pact concerning TikTok’s operations within the US and a temporary suspension of China’s recently intensified controls on rare earth mineral exports.
Furthermore, Bessent indicated that the 100% tariff previously threatened by President Donald Trump on Chinese goods is unlikely to be implemented. Concurrently, China is expected to resume significant purchases of soybeans from the United States.
Both nations are endeavoring to de-escalate the ongoing trade conflict between the world’s two largest economies.
President Trump and Chinese President Xi Jinping are scheduled to engage in discussions on Thursday in South Korea.
Secretary Bessent held meetings with senior Chinese trade representatives on the sidelines of the Association of Southeast Asian Nations (Asean) summit in Malaysia, an event President Trump is also attending as part of his Asian tour. Beijing described the discussions as “constructive.”
Bessent stated that the countries had “reached a substantial framework for the two leaders,” adding, “The tariffs will be averted.”
The Chinese government issued a statement confirming that both negotiating teams “reached a basic consensus on arrangements to address their respective concerns.”
“Both sides agreed to further finalize specific details,” the statement concluded.
Trump’s Tariff Strategy
Since his return to the White House, President Trump has implemented and threatened extensive tariffs on goods imported from various countries, asserting that these measures would stimulate US manufacturing and job growth. This tariff policy has led numerous nations, including the UK, to enter into new trade agreements with the United States.
However, the most severe tariffs threatened have been directed at China. Beijing has retaliated with its own measures, although both parties agreed to a moratorium on implementing these levies while pursuing a trade deal.
Despite this, President Trump indicated earlier this month that he would impose an additional 100% tariff on Chinese goods starting in November. This decision was reportedly a response to China tightening restrictions on the export of rare earths – essential materials for manufacturing numerous electronic products. The US President accused Beijing of exhibiting increasingly hostile behavior and attempting to hold the world “captive.”
China currently processes approximately 90% of the world’s rare earths, which are integral to the production of items ranging from solar panels to smartphones, making their supply to US manufacturers a critical point of negotiation.
The last occasion Beijing imposed stricter export controls – following an increase in tariffs on Chinese goods by President Trump earlier this year – it sparked considerable criticism from many US companies heavily reliant on these materials.
“China will delay that for a year while they re-examine it,” Bessent explained in a separate interview on Sunday.
TikTok Deal on the Horizon?
Bessent also reported that an agreement had been reached regarding the US operations of the video-sharing platform TikTok. He indicated that Presidents Trump and Xi are set to “consummate that transaction on Thursday.”
The US has expressed concerns over national security, prompting calls for TikTok’s US operations to be separated from its Chinese parent company, ByteDance.
Previously, TikTok was mandated to divest its US operations or face a shutdown. However, President Trump has postponed the enforcement of this ban four times to facilitate negotiations, extending the deadline to December.
Last month, the White House announced that US companies would gain control over TikTok’s algorithm, and that American individuals would hold a majority of seats on the app’s US operations board.
Although President Trump initially advocated for banning TikTok during his first term, he has since shifted his stance. He notably utilized the highly popular platform to galvanize support among young Americans during his successful 2024 presidential campaign.
On Sunday, Washington also revealed a series of trade agreements with Malaysia and Cambodia, alongside framework agreements with Thailand and Vietnam.
The Southeast Asian region, which is significantly reliant on trade with the US, has been particularly affected by President Trump’s tariffs.
The US intends to maintain its tariff rate of up to 20% on the goods of these nations, with the possibility of exemptions for specific products.
“Our message to the nations of South East Asia is that the United States is with you 100% and we intend to be a strong partner for many generations,” President Trump stated in Malaysia, marking the initial stop of his week-long Asian tour.
President Trump finalized agreements concerning the trade of critical minerals with Thailand and Malaysia. These pacts are expected to enhance the US’ access to rare earth elements and other vital metals, diversifying supply beyond China.
Additionally, President Trump announced framework agreements designed to facilitate increased trade in goods between the US and Cambodia and Thailand.
The White House and Vietnam jointly declared “unprecedented” trade access between their nations. Vietnam also committed to purchasing Boeing aircraft valued at over $8 billion (£6 billion) from the US, alongside American agricultural products.
Additional reporting by Osmond Chia