US, China reach rare earths, tariff pause for Trump and Xi to consider

Top Chinese and US economic officials on Sunday hashed out the framework of a trade deal for US President Donald Trump and Chinese President Xi Jinping to finalize that would pause steeper American tariffs and Chinese rare earths export controls and resume U.S. soybean sales to China, US officials said.

US Treasury Secretary Scott Bessent said the talks on the sidelines of the ASEAN Summit in Kuala Lumpur had eliminated the threat of Trump's 100% tariffs on Chinese imports starting November 1. Bessent said he expects China to delay implementation of its rare earth minerals and magnets licensing regime by a year while the policy is reconsidered.

Read More: US, China race to ease tensions ahead of Trump-Xi Malaysia talks

Bessent told NBC's "Meet the Press" that he anticipated the agreement would defer China's expanded export controls on rare earth minerals and magnets and avoid a new 100% US tariff on Chinese goods threatened by Trump.

He said Trump and Xi would discuss soybean and agricultural purchases from American farmers, more balanced trade and resolving the US fentanyl crisis, which was the basis of 20% US tariffs on Chinese goods.

China's Li said both sides had reached a "preliminary consensus" and will next go through their respective internal approval processes.

"The US position has been tough," Li said. "We have experienced very intense consultations and engaged in constructive exchanges in exploring solutions and arrangements to address these concerns."

Trump arrived in Malaysia on Sunday for a summit of the Association of Southeast Asian Nations, his first stop in a five-day Asia tour that is expected to culminate in a face-to-face with Xi in South Korea on October 30.

After the talks, he struck a positive tone, saying: "I think we’re going to have a deal with China".

Trade truce

Both sides are looking to avert an escalation of their trade war after Trump threatened new 100% tariffs on Chinese goods and other trade curbs starting on November 1, in retaliation for China's expanded export controls on rare earth magnets and minerals.

Beijing and Washington rolled back most of their triple-digit tariffs on each other's goods under a trade truce, which is due to expire on November 10.

The S&P 500 gaining more than three-quarters of a percent and the Nasdaq climbing more than 1%.

The US and Chinese officials said they discussed trade expansion, an extension of the truce, fentanyl, US port entrance fees, rare earths, TikTok and more.

Li described the discussions as "candid", while Bessent said they were "very substantial negotiations".

Bessent said the truce could be extended, pending the president's decision, marking a second extension since it was first signed in May.

Talking points

While the White House has officially announced the highly anticipated Trump-Xi talks, Beijing has yet to confirm that the two leaders will meet.

On the sidelines of the ASEAN Summit, Trump hinted at possible meetings with Xi in China and the United States.

"We’ve agreed to meet. We’re going to meet them later in China, and we're going to meet in the US, in either Washington or at Mar-a-Lago,” he said.

Among Trump's talking points with Xi are Chinese purchases of US soybeans, concerns around democratically-governed Taiwan which Beijing views as its own territory, and the release of jailed Hong Kong media tycoon Jimmy Lai.

The detention of the founder of the now-defunct pro-democracy newspaper Apple Daily has become the most high-profile example of China's crackdown on rights in Hong Kong.

Trump also said that he would seek China's help in Washington's dealings with Russia, as Moscow's war in Ukraine grinds on.

Also Read: China’s new five-year plan sharpens industry, tech focus as US tensions mount

Fragile truce

Tensions between the world's two largest economies flared in the past few weeks as a delicate trade truce, reached after a first round of trade talks in Geneva in May and extended in August, failed to prevent the two sides from hitting each other with more sanctions, export curbs and threats of stronger retaliatory measures.

The latest round of talks has likely centred around China's expanded controls of rare earths exports that have caused a global shortage.

That has prompted the Trump administration to consider a block on software-powered exports to China, from laptops to jet engines, according to a Reuters report.