"US-China Trade Truce Averts Tariff War, Keeps Rare Earths Flowing"

The U.S. and China have reached a preliminary consensus on trade during high-level talks in Malaysia, averting immediate escalations in tariffs and rare earth export controls while setting the stage for direct discussions between President Donald Trump and Chinese President Xi Jinping. The breakthrough, announced by Treasury Secretary Scott Bessent, includes a deferral of China's proposed restrictions on rare earth minerals—a critical component for global tech and defense industries—and a pause on Trump's threatened 100% tariffs on Chinese goods, according to Coinotag. The framework also addresses fentanyl precursor controls and opens pathways for expanded agricultural trade, including potential soybean purchases by China, according to the Times of India.

The negotiations, held ahead of an ASEAN summit in Malaysia, followed weeks of heightened tensions. Trump's administration had warned of tariffs on Chinese goods starting November 1 after Beijing imposed export controls on rare earths, which account for over 90% of global processing capacity, reported by Turkiye Today. Meanwhile, China's Commerce Ministry emphasized the talks aimed to stabilize economic ties and address "important issues" in bilateral trade, according to Turkiye Today. The agreement temporarily extends a May truce that had paused most tariffs until November 10, with Bessent indicating the truce could be further extended, the Times of India reported.

The U.S. investigation into China's compliance with the 2020 Phase One trade deal—signed under Trump's first term—has long been a flashpoint. That deal required China to purchase an additional $200 billion in U.S. goods, but analysis by the Peterson Institute for International Economics, reported in the New York Times, found China met only 58% of its commitments, partly due to pandemic-related trade disruptions. Critics, including former Trump officials, have argued the targets were unrealistic, while the Biden administration faced blame for failing to enforce the agreement. The new framework does not resolve these longstanding disputes but shifts focus to immediate de-escalation and pragmatic cooperation.

Rare earth minerals, essential for semiconductors, electric vehicles, and AI hardware, were a central topic. China's export controls had raised global supply chain concerns, prompting the U.S. to consider retaliatory measures, according to Coinotag. By deferring these restrictions, the deal provides short-term stability for industries reliant on Chinese materials, though long-term diversification efforts remain a priority for the U.S, the Coinotag coverage noted. Bessent highlighted that the agreement includes "very substantial" terms for Trump and Xi to finalize, including discussions on AI technology and agriculture, the Times of India reported.

The path forward hinges on upcoming in-person meetings between Trump and Xi. Trump, who arrived in Malaysia for the ASEAN summit, expressed confidence in securing a "good deal" but has also hinted at additional meetings in both China and the U.S. before the G20 summit, the Times of India reported. Meanwhile, China's Vice Premier He Lifeng confirmed preliminary consensus on extending the trade truce and addressing fentanyl precursor chemicals, though details remain under wraps, Turkiye Today reported.

For global markets, the framework eases near-term risks of a trade war but leaves unresolved tensions, particularly around technology and geopolitical rivalries. Analysts note that sustained cooperation will depend on Trump's ability to balance domestic pressures—such as demands from farmers and tech firms—with diplomatic pragmatism, Coinotag observed. As supply chains remain fragile and rare earth dependencies persist, the U.S. and China's ability to maintain this fragile equilibrium will be closely watched.