In a striking development that could reshape the global economic landscape, the United States and China have agreed on a framework for a major trade deal, raising hopes for a de-escalation of their long-running trade war. The breakthrough was announced after a weekend of intensive negotiations in Kuala Lumpur, Malaysia, on the sidelines of the ASEAN summit, and comes just days before a highly anticipated face-to-face meeting between US President Donald Trump and Chinese leader Xi Jinping in South Korea.
US Secretary of the Treasury Scott Bessent, who led the American delegation in Malaysia, told reporters that the two sides had made “significant progress” toward a deal. According to Bessent, the framework includes several key provisions: a deferral of China’s threatened export controls on rare earth minerals, avoidance of the 100% tariffs on Chinese goods that Trump had threatened to impose starting November 1, and a resumption of substantial Chinese purchases of US agricultural products, particularly soybeans. Bessent was optimistic, telling NBC News, “I believe when the announcement of the deal with China is made public that our soybean farmers will feel really good about what’s going on for this season and the coming seasons for several years.”
The stakes could hardly be higher. Since returning to the White House, President Trump has embarked on a radical shake-up of global trade, imposing sweeping tariffs on imports from a range of countries, with the steepest levies targeted at China. Beijing, in turn, has retaliated with its own measures, including the recent announcement of export controls on rare earth magnets and semiconductor materials—minerals critical for the manufacture of everything from smartphones to electric vehicles and fighter jets. China, which processes roughly 90% of the world’s rare earths, has held a powerful bargaining chip in these negotiations.
Earlier this month, China’s Ministry of Commerce revealed plans to require companies worldwide to obtain licenses to export products containing even trace amounts of Chinese-sourced rare earths. The new rules were set to take effect on December 1, sparking widespread fears of disruption to global supply chains. In response, Trump threatened to hit all Chinese goods with a 100% tariff beginning November 1, escalating tensions and raising concerns of a full-blown trade war that could inflict catastrophic damage on the global economy.
But the latest talks in Kuala Lumpur have injected a dose of optimism into the proceedings. Chinese Vice Premier He Lifeng, Beijing’s chief trade negotiator, said the two sides had reached “a basic consensus” on arrangements to address each side’s concerns and had agreed to “finalise specific details” and “proceed with domestic approval processes.” The Chinese government described the discussions as “constructive,” and Bessent echoed that sentiment, stating, “The tariffs will be averted.”
Asian stock markets responded swiftly to the news, with Japan’s Nikkei 225 and South Korea’s KOSPI both surging more than 2% by midday on Monday, and Hong Kong’s Hang Seng index rising nearly 1%. Investors welcomed the prospect of easing US-China tensions, which have loomed over global markets for years.
Another significant element of the framework is an agreement on TikTok’s US operations. The US has long pressed for the video-sharing platform to be separated from its Chinese parent company, ByteDance, over national security concerns. Bessent told CBS that a “final deal” on TikTok had been reached, and that Trump and Xi would “consummate that transaction on Thursday.” Under the terms announced last month, US companies will control TikTok’s algorithm, and Americans will hold six of seven board seats for the app’s US operations. Trump, who once called for TikTok to be banned, has since embraced the platform as a tool to connect with younger voters, especially during his 2024 presidential campaign.
The trade talks also touched on broader regional issues. During his stop in Malaysia, Trump announced a series of new trade deals and framework agreements with Southeast Asian nations, including Malaysia, Cambodia, Thailand, and Vietnam. These deals are designed to expand US access to critical minerals and other goods, diversifying supply chains that have been heavily dependent on China. Notably, Vietnam agreed to purchase Boeing jets worth more than $8 billion and to buy additional American agricultural 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,” Trump declared in Malaysia.
For US farmers, who have been caught in the crossfire of the trade war, the resumption of Chinese soybean purchases is especially welcome news. China is the world’s largest buyer of soybeans, and when it halted orders during the height of the trade tensions, American farmers felt the pinch. Bessent, himself a soybean farmer, acknowledged the hardship, saying, “I have felt this pain too... I think we have addressed the farmers’ concerns.”
The upcoming Trump-Xi summit, scheduled for October 30 on the sidelines of the APEC summit in Gyeongju, South Korea, is now poised to be a pivotal moment. Both leaders are expected to review the framework hammered out by their negotiators and, if all goes according to plan, finalize a deal that could halt the escalation of tariffs and restore a measure of stability to global trade. The Chinese side has indicated that the agreement will still need to go through domestic approval processes, but the tone from both capitals has shifted markedly from confrontation to cautious optimism.
Trump’s whirlwind Asian tour is also drawing attention for its diplomatic choreography. After leaving Kuala Lumpur, he is set to meet Japan’s new Prime Minister, Sanae Takaichi, before heading to South Korea for the summit with Xi. Meanwhile, the US has signaled its commitment to Southeast Asia by maintaining tariff rates of up to 20% on goods from countries like Malaysia, Cambodia, and Thailand, but is open to carving out exemptions for certain products as part of its evolving trade strategy.
Still, challenges remain. The tit-for-tat measures of the past few years have left scars on both economies, and the world will be watching closely to see whether the two superpowers can move beyond temporary truces to forge a more durable economic partnership. The next few days could prove decisive, not just for Washington and Beijing, but for the entire global trading system.
As the world’s attention turns to South Korea, the outcome of the Trump-Xi meeting may well determine whether the fragile progress achieved in Malaysia can be transformed into lasting peace—or whether the specter of a trade war will continue to haunt the global economy. For now, at least, the mood is one of hope, as the world’s two largest economies inch closer to a truce that many thought impossible just weeks ago.
