U.S.-China Framework Averts Tariff Surge, Suspends Rare Earth Curbs

U.S. and Chinese officials have reached a preliminary framework agreement to avert a threatened 100% tariff increase on Chinese imports and ease tensions over rare earth mineral export controls, Treasury Secretary Scott Bessent announced this week. The deal, negotiated during high-level talks in Malaysia, sets the stage for a potential meeting between President Donald Trump and Chinese President Xi Jinping at the APEC summit in South Korea later this month. The agreement includes a temporary pause on China's proposed rare earth export restrictions, a critical lifeline for U.S. tech and defense industries reliant on the materials, and a revival of Chinese purchases of U.S. soybeans, which dropped to zero in September, according to a Bitget report.

The framework follows months of escalating threats from both sides. Trump had warned of imposing 100% tariffs on November 1 if China proceeded with its rare earth export controls, which the U.S. argues could destabilize global supply chains for semiconductors and advanced manufacturing. China, in turn, has tightened regulations on rare earths, a strategic resource it dominates in processing, and has hinted at retaliatory measures. The Malaysia negotiations, led by Vice Premier He Lifeng and U.S. Trade Representative Jamieson Greer, addressed these issues alongside agricultural trade and semiconductor tariffs, according to a MarketScreener report.

The deal's timing is critical. It precedes Trump's planned meeting with Xi, which China has yet to formally confirm, and averts immediate economic disruption ahead of the November 10 expiration of the current trade truce. Bessent emphasized that China will delay its rare earth export controls by a year while the policy is reconsidered, a move that eases pressure on U.S. companies like Boeing and Tesla, which depend on Chinese-supplied materials for aircraft and electric vehicles, according to a Coinotag article. The agreement also hints at broader cooperation, with discussions on resuming Chinese soybean purchases—a key demand from U.S. farmers who have lost market share to Brazil and Argentina, according to ABC News.

Boeing Co. has meanwhile appointed Landon Loomis, a Mandarin-speaking executive with diplomatic experience in China, to lead its operations in the country. The move underscores the aerospace giant's push to secure a landmark deal to sell up to 500 aircraft to China, a transaction contingent on de-escalating trade tensions. Loomis's background, including a five-year stint at the U.S. embassy in Beijing, positions him to navigate the delicate balance between commercial interests and geopolitical risks, according to a Bloomberg report.

Analysts caution that while the framework is a positive step, its durability depends on the Trump-Xi meeting and subsequent negotiations. China's reluctance to confirm the leaders' meeting and unresolved issues like the detention of Hong Kong media figure Jimmy Lai highlight lingering challenges. However, the pause in tariffs and export controls provides immediate relief, with global markets reacting cautiously optimistic to the news. The agreement also aligns with broader efforts to stabilize supply chains, as the U.S. seeks alternatives to Chinese rare earths and China aims to reduce trade frictions, noted the Global Times.

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