After months of escalating rhetoric, Washington and Beijing may finally be stepping back from the edge.
US Treasury Secretary Scott Bessent on Sunday announced that both sides had reached a 'very substantial framework' to prevent a new round of 100 percent tariffs on Chinese goods and secure a deferral of China’s planned rare earth export controls.
Speaking to Reuters after two days of negotiations in Kuala Lumpur, Bessent said the understanding would allow the US and China to move toward a more 'balanced' trade relationship, and set the stage for a potential breakthrough when President Donald Trump and President Xi Jinping meet next week.
“I’m not anticipating the 100 percent tariffs,” Bessent said on NBC’s Meet the Press. “We’re also anticipating a deferral on the rare earth export controls the Chinese had discussed.”
What’s in the framework: tariffs, rare earths, and soybeans
The framework reportedly includes key provisions that would:
- Prevent Trump’s threatened 100 percent tariffs on Chinese imports scheduled for November 1,
- Delay or suspend China’s rare earth export restrictions,
- Restart talks on US agricultural exports, especially soybeans, and
- Open channels to tackle fentanyl trafficking, a key US domestic concern.
The broad understanding follows a high-level dialogue between senior officials, including China’s Vice Premier He Lifeng, trade negotiator Li Chenggang, and US Trade Representative Jamieson Greer.
Li confirmed that a 'preliminary consensus' had been reached on extending the existing trade truce, as well as discussions on export curbs and drug control cooperation.
Kuala Lumpur diplomacy: setting the stage for Trump-Xi talks
The Kuala Lumpur meetings, held on the sidelines of the ASEAN summit, mark the most tangible thaw in US-China relations since the May 2025 trade truce. That truce, which paused tariffs on hundreds of goods, was due to expire on November 10, raising fears of a renewed trade war.
Bessent said the new framework would help avoid that outcome and prepare the ground for direct talks between Trump and Xi in South Korea next week.
“I think we have a very successful framework for the leaders to discuss on Thursday,” Bessent told reporters, adding that final terms would be determined by the two presidents.
Trump, who arrived in Malaysia on Sunday, echoed that optimism:
“I think we’re going to have a deal with China,” he said, hinting that more face-to-face meetings with Xi could follow.
Why rare earths are the real flashpoint
China’s rare earth export controls, covering minerals essential to semiconductors, EVs, and defense technology, have been at the heart of recent tensions. The restrictions had sparked global supply fears and pushed Washington to explore countermeasures, including new export limits on laptops and jet engines bound for China.
A temporary deferral of those curbs could ease supply chain concerns and stabilise markets rattled by months of brinkmanship.
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