U.S., China Seek Truce on Rare Earths, Tariffs to Avert Trade War

U.S. and Chinese officials are set to finalize a sweeping trade deal in Malaysia this week, aiming to de-escalate tensions over rare earth exports, agricultural tariffs, and broader economic disputes. The talks, announced by China, are led by Chinese Vice Premier He Lifeng and U.S. Treasury Secretary Scott Bessent, and come ahead of a planned meeting between Presidents Donald Trump and Xi Jinping in South Korea. The discussions, scheduled for October 24–27, focus on defusing a crisis triggered by China's recent restrictions on rare earth shipments and looming U.S. tariffs.

The rare earth issue has become a flashpoint in the trade war, with China's new export controls prompting Trump to threaten 100% tariffs on Chinese goods starting November 1. Rare earth elements, critical for tech and defense industries, have been a strategic lever for Beijing, while Washington seeks to secure supply chains. U.S. Trade Representative Jamieson Greer emphasized the need for "balanced trade" during the negotiations, and Chinese officials reiterated their stance, according to China Daily, that civilian-sector export restrictions are nonexistent.

Agricultural tensions also dominate the agenda. U.S. soybean exports to China collapsed to zero tons in September 2025 — the first such drop since 2018 — due to tariffs and Beijing's shift to South American suppliers. Trump has framed the issue as a negotiation tactic, urging China to resume purchases to support American farmers. The talks aim to revive a $200 billion annual trade pact under the 2020 agreement, which China fell short of fulfilling, buying only 58% of promised U.S. goods; the U.S. has opened an investigation into China's compliance with that deal.

Preliminary consensus emerged on extending the current 90-day tariff truce, set to expire November 10, and deferring China's rare earth export controls. Treasury Secretary Bessent announced a "very substantial framework" during an NBC interview, stating that the U.S. would avoid the 100% tariff threat and that final terms would be decided by Trump and Xi. Chinese trade negotiator Li Chenggang confirmed a preliminary agreement on truce extensions, fentanyl controls, and export policies, though details remain undisclosed.

The outcome could stabilize global markets, particularly in agriculture and technology sectors. Analysts estimate that a soybean deal could inject billions into U.S. farming and stabilize food prices. However, skepticism persists, with experts like Wang Wen of Renmin University warning that inconsistent U.S. policies erode trust. "This approach undermines the foundation for any lasting agreement," he noted.

The talks precede Trump's APEC summit with Xi, where issues like Taiwan, Hong Kong, and the Russia-Ukraine conflict may also arise. While both sides express optimism, the fragile détente hinges on delivering concrete commitments. As one Zhejiang-based manufacturer noted, "A sound China-U.S. relationship is the cornerstone for mutual growth".