Fragile Truce in U.S.-China Trade War as Both Sides Suspend Tariff Threats

U.S. Treasury Secretary Scott Bessent signaled a potential de-escalation in the U.S.-China trade war, saying China will make "substantial" purchases of U.S. soybeans and avoid imposing an extra 100% tariff, according to a Fortune report. The announcement comes as both nations seek to stabilize their economic relationship ahead of a critical meeting between President Donald Trump and Chinese President Xi Jinping at the Asia-Pacific Economic Cooperation (APEC) summit in South Korea, according to a Benzinga article.

The tensions had escalated in recent weeks, with Trump threatening to impose a 100% tariff on Chinese imports starting November 1 in response to Beijing's expanded export controls on rare earth minerals, according to a New York Times report. These controls, which require overseas exporters using Chinese-sourced rare earths to obtain licenses, have disrupted global supply chains and prompted retaliatory measures from the U.S. and European Union, as detailed in a Scanx report. However, after high-level discussions between U.S. Treasury Secretary Scott Bessent, U.S. Trade Representative Jamieson Greer, and Chinese Vice Premier He Lifeng, both sides agreed to pause punitive actions. Bessent said the 100% tariff threat is "effectively off the table," while China reportedly will delay its rare earth export restrictions by a year, according to a Yahoo Finance report.

A key sticking point in the negotiations was China's abrupt halt in U.S. soybean imports, which dropped to zero in September—the first such occurrence since 2018, according to Seeking Alpha. This shift has allowed Brazil and Argentina to dominate China's soybean market, with Brazil alone accounting for 85% of China's imports during the month, as reported by the Times of India. U.S. farmers, who rely on China for nearly half of their overseas soybean sales, have faced significant losses. Bessent, however, assured that the deal will revive U.S. soybean exports, stating farmers will be "extremely happy" with the terms, according to Fortune.

The talks also addressed broader economic concerns, including U.S. port fees, fentanyl control cooperation, and China's role in the Ukraine conflict. Chinese officials described the discussions as reaching a "preliminary consensus," though they emphasized the need for internal approvals before finalizing the agreement, according to Yahoo Finance. Trump, who has long advocated for a "good" trade deal, hinted at additional meetings with Xi in the future, including potential talks in China and the U.S.

Meanwhile, the European Union is separately evaluating responses to China's rare earth controls, with French President Emmanuel Macron suggesting the use of the EU's anti-coercion instrument if diplomatic efforts fail, as noted in the Scanx report. The EU's reliance on China for 90% of its rare earth magnet imports has heightened concerns over supply chain vulnerabilities.

As the U.S. and China work to extend their trade truce beyond November 10, the outcome of these negotiations will have far-reaching implications for global markets. For now, the pause in tariffs and export controls offers a tentative reprieve, though the fragile détente underscores the complexity of balancing economic interests amid geopolitical rivalries.