US and China agree framework of trade deal ahead of Trump-Xi meeting

The US and China have agreed on the basic terms of a possible trade deal. The US Treasury Secretary indicated that the presidents of the two countries will talk about it when they meet later this week.

Scott Bessent told CBS, which is the BBC’s US news partner, that this included a “final deal” on how TikTok will run in the US and a delay in China’s stricter limits on rare earth minerals.

He also claimed that he didn’t think President Donald Trump’s threat of a 100% tariff on Chinese imports would happen, and that China would start buying a lot more soybeans from the US again.

Both countries want to stop the trade war between the two biggest economies in the world from getting worse.

Trump and Xi Jinping, the president of China, are going to meet in South Korea on Thursday.

Bessent spoke with high-ranking Chinese trade officials at the same time as the Association of Southeast Asian Nations (Asean) conference in Malaysia, which Trump is also attending as part of a tour of Asia. Beijing said the talks were “constructive.”

Bessent added that the two countries had “reached a substantial framework for the two leaders.” He also said, “The tariffs will be avoided.”

In a statement, the Chinese government said that both negotiating teams “reached a basic consensus on arrangements to address their respective concerns.”

“Both sides agreed to work out more specific details,” they said.

Trump’s tariff strategies
Since Trump re-entered the White House, he has levied and threatened sweeping tariffs on imports from overseas on various countries, stating that the measure would help promote US industry and jobs. Many countries, including the UK, have made new deals with the US since tariffs were put in place.

But the highest taxes he has vowed to impose have been on China. Beijing has responded with its own actions, but the two sides agreed to put off the tariffs while they work on a trade deal.

But earlier this month, Trump announced he would put a 100% tariff on Chinese imports starting in November. This was in response to China making it harder to export rare earths, which are needed to make many gadgets. The president of the United States said that Beijing was “becoming very hostile” and seeking to “hold the world captive.”

China processes about 90% of the world’s rare earths, which are used in everything from smartphones to solar panels. This makes it a key bargaining chip for US manufacturers.

When Trump hiked tariffs on Chinese imports earlier this year, Beijing tightened export controls again. Many US companies that depend on the commodities were quite upset.

Bessent told This Week, another news show, on Sunday that China would “put that off for a year while they look at it again.” Soybeans are another point of concern; China is the world’s top consumer of them. When the trade conflict got worse, China stopped all orders, which affected US farmers.

Bessent implied the boycott may soon be over but refused to give details.

“I’m a soybean farmer, so I know how you feel…” “I think we’ve dealt with the farmers’ worries,” he stated on This Week.

“I think our soybean farmers will feel really good about what’s going on this season and for the next few years when the deal with China is made public.”

Is the TikTok transaction done?
Bessent also said that Trump and Xi had agreed to a deal for TikTok’s US subsidiary, and they will “consummate that transaction on Thursday.”

The US has tried to get the app’s US operations away from its Chinese parent company, ByteDance, because of worries about national security.

Trump has put off enforcing the ban four times to give TikTok more time to negotiate, and he has pushed back the deadline to December. Before, TikTok was warned it had to sell its US operations or risk being shut down.

Last month, the White House said that US firms would run TikTok’s algorithm and that Americans would hold six of the seven board seats for the app’s US operations.

Trump wanted to prohibit TikTok at first during his first term, but now he has changed his mind. During his successful 2024 presidential campaign, he used the very popular platform to get more support from young Americans. On Sunday, Washington also said it has made a lot of trade accords with Malaysia and Cambodia and framework agreements with Thailand and Vietnam.

The tariffs that Trump put in place have affected this area severely because it relies significantly on trade with the US.

The US will preserve its tariff rate of up to 20% on goods from both countries, but it may make some products exempt from the tax.

“Our message to the countries of South East Asia is that the United States is with you 100% and we want to be a strong partner for many generations,” Trump said in Malaysia, the first stop of his week-long trip to Asia.

Trump made deals with Thailand and Malaysia to trade important minerals. These give the US access to rare earth elements and other metals in places other than China.

Trump also said that the US would be able to trade more goods with Cambodia and Thailand.

The White House and Vietnam said that trade between the two countries will be “unprecedented.” Vietnam also agreed to buy American agricultural supplies and Boeing jets worth more than $8 billion (£6 billion).

Source: https://www.bbc.com/news/articles/c1lqj5lz4geo

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