"US-China Trade Agreement Prevents Tariff Conflict, Ensures Continued Supply of Rare Earths"

During high-level negotiations in Malaysia, the United States and China have come to an initial agreement on trade, preventing an immediate increase in tariffs and restrictions on rare earth exports. This development paves the way for direct talks between President Donald Trump and Chinese President Xi Jinping. Treasury Secretary Scott Bessent announced that the agreement involves China postponing its planned limits on rare earth minerals—vital for the global technology and defense sectors—and the U.S. holding off on imposing 100% tariffs on Chinese imports, as reported by

. The arrangement also includes measures on fentanyl precursor chemicals and creates opportunities for expanded agricultural trade, such as possible soybean imports by China, according to the .

The discussions took place just before the ASEAN summit in Malaysia, following several weeks of rising tensions. The Trump administration had threatened to implement tariffs on Chinese products starting November 1 after China introduced export controls on rare earths, which are responsible for more than 90% of global processing, as noted by

. At the same time, China's Commerce Ministry stated that the talks were intended to steady economic relations and tackle "key issues" in trade between the two countries, Turkiye Today reported. The deal temporarily prolongs a truce from May that had suspended most tariffs until November 10, and Bessent suggested the pause could be extended further, according to the Times of India.

The U.S. review of China’s adherence to the 2020 Phase One trade agreement—signed during Trump’s first term—has been a persistent source of friction. That agreement obligated China to buy an extra $200 billion in American goods, but the Peterson Institute for International Economics, as cited in the

, found that China fulfilled only 58% of its commitments, partly due to disruptions caused by the pandemic. Critics, including some former Trump officials, have said the targets were unrealistic, while the Biden administration has faced criticism for not enforcing the deal. The new arrangement does not settle these ongoing disagreements but instead focuses on reducing tensions and promoting practical cooperation for now.

Rare earth elements, which are crucial for producing semiconductors, electric vehicles, and AI hardware, were a major focus of the talks. China’s export restrictions had sparked concerns about global supply chains, leading the U.S. to consider countermeasures, according to Coinotag. By delaying these controls, the agreement brings short-term relief to industries dependent on Chinese resources, though the U.S. continues to prioritize diversifying its supply sources in the long run, Coinotag reported. Bessent pointed out that the deal contains "very substantial" provisions for Trump and Xi to finalize, including negotiations on AI and agriculture, as mentioned by the Times of India.

The next steps will depend on upcoming face-to-face meetings between Trump and Xi. Trump, who is in Malaysia for the ASEAN summit, voiced optimism about reaching a "good deal" and suggested there could be further meetings in both China and the U.S. before the G20 summit, the Times of India noted. Meanwhile, Chinese Vice Premier He Lifeng confirmed that a preliminary agreement had been reached to extend the trade truce and address fentanyl precursor issues, though specifics have not been disclosed, Turkiye Today reported.

For global markets, this agreement reduces the immediate threat of a trade conflict but leaves deeper issues unresolved, especially regarding technology and geopolitical competition. Experts point out that continued cooperation will rely on Trump’s ability to balance domestic demands from sectors like agriculture and technology with diplomatic flexibility, as observed by Coinotag. With supply chains still vulnerable and reliance on rare earths ongoing, the world will be watching closely to see if the U.S. and China can maintain this delicate balance.