The United States and China have made significant strides towards a potential trade deal, as confirmed by US Treasury Secretary Scott Bessent. This agreement will be a focal point of discussions during the upcoming meeting of the two nations' leaders later this week. Bessent shared insights with CBS, highlighting that the framework includes a resolution concerning TikTok’s operations in the US and a postponement of China's stringent controls over rare earth minerals.
Bessent expressed optimism regarding the situation, stating that he does not foresee the implementation of the proposed 100% tariff on Chinese goods, which was threatened by President Donald Trump. In a positive turn, China is set to resume substantial purchases of soybeans from the US, marking a critical development in the ongoing trade relations between the two largest economies in the world.
Both nations are actively working to de-escalate tensions in the trade war that has significantly impacted global markets. Trump and Chinese President Xi Jinping are scheduled to engage in talks on Thursday in South Korea, a meeting anticipated to further solidify the framework discussed by their negotiators.
Bessent recently met with senior Chinese trade officials during the Association of Southeast Asian Nations (ASEAN) summit in Malaysia, where both sides characterized the discussions as constructive. He noted that the countries have established a substantial framework for their leaders to build upon, aiming to avert the proposed tariffs. The Chinese government echoed this sentiment, stating that both negotiating teams have reached a basic consensus and agreed to finalize specific details soon.
Since re-entering the White House, President Trump has adopted a strategy of imposing and threatening extensive tariffs on imports from various countries, arguing that this approach would bolster US manufacturing and job creation. The tariffs have led to new trade agreements with several nations, including the UK, although the most severe tariffs have been aimed at China.
In retaliation, China has implemented its own measures, but both countries have agreed to postpone the implementation of further levies while they pursue a comprehensive trade deal. However, Trump recently indicated plans to impose an additional 100% tariff on Chinese goods starting in November, citing China's recent tightening of restrictions on the export of rare earth materials, which are essential for numerous electronic products.
China's dominance in processing approximately 90% of the world’s rare earths has made these materials a crucial bargaining chip in the trade negotiations. The last tightening of China's export controls led to significant backlash from US firms reliant on these materials. Bessent confirmed that China would postpone these restrictions for a year to reassess the situation, allowing for further negotiation.
Another significant point of contention is the soybean market, where China leads as the largest buyer. The trade war had previously led to China halting all soybean orders, adversely affecting US farmers. Bessent hinted that this boycott might soon come to an end, although he withheld specific details. As a soybean farmer himself, he empathized with the struggles faced by farmers, expressing confidence that the upcoming deal would positively impact them.
In addition to trade negotiations, Bessent indicated that a deal regarding the video-sharing platform TikTok had been reached, pending final approval from Trump and Xi. The US has pressured TikTok’s Chinese parent company, ByteDance, to divest its US operations due to national security concerns. While the US previously mandated a sale or risk a shutdown, Trump has deferred the implementation of this ban multiple times to facilitate ongoing negotiations, extending the deadline to December.
The White House recently announced that US companies will gain control over TikTok's algorithm, with Americans holding six of the seven board seats for the app's US operations. This shift reflects a change in Trump's approach, as he previously sought to ban TikTok but has now recognized its potential to engage younger voters during his 2024 presidential campaign.
In a broader context, the Trump administration has also secured trade deals with Malaysia and Cambodia, alongside frameworks agreed upon with Thailand and Vietnam. These developments highlight the US's commitment to strengthening trade relations in the Asia-Pacific region while navigating the complexities of its relationship with China.
