American and Chinese negotiators have reached a framework agreement on trade, tariffs, and rare earth exports, setting the stage for a high-stakes meeting between President Donald Trump and Chinese President Xi Jinping later this week in South Korea.

After two days of talks in Malaysia, Treasury Secretary Scott Bessent called the progress “a very successful framework for the leaders to discuss,” signaling a potential breakthrough in the ongoing US–China trade war.

According to Bessent, Trump’s threat of 100% tariffs on Chinese goods is now off the table, following China’s decision to delay its rare earth export controls by one year while it reexamines the plan. Rare earths—critical for EVs, semiconductors, and military equipment—have been at the heart of escalating tensions between Washington and Beijing.

The preliminary deal also includes commitments for China to resume substantial US soybean purchases and cooperation on fentanyl trafficking and export control enforcement. Officials described the discussions as “candid and in-depth,” noting that both sides would now begin domestic approval procedures.

US Trade Representative Jamieson Greer said the framework covers “a range of issues” including TikTok, Taiwan, agriculture, and reciprocal tariffs, while emphasizing that a final decision will rest with the two leaders when they meet later this week.

“The president gave me maximum leverage when he threatened 100% tariffs if China moved forward with rare earth export restrictions,” Bessent said. “We have averted that.”

The talks, held on the sidelines of the ASEAN Summit in Kuala Lumpur, come as Trump begins a weeklong Asia trip focused on restoring trade stability and reshaping US economic alliances.

If finalized, the framework could mark one of the most significant diplomatic breakthroughs of Trump’s second term—potentially cooling months of tariff battles and restoring some predictability to global markets.

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