Key Highlights
- The US and China have agreed the framework of a potential trade deal that will be discussed during President Donald Trump’s upcoming meeting with Chinese President Xi Jinping in South Korea.
- Achievements include resolving the TikTok issue, deferring rare earth minerals controls, avoiding new tariffs on Chinese goods, and resuming soybean purchases from the US.
- The countries are seeking to avoid further escalation in a trade war between the world’s two largest economies.
- Trump will meet Xi in South Korea later this week as part of his Asia tour.
US and China Agree on Trade Framework Ahead of Key Meeting
The United States and China have reached a substantial framework for their trade deal, which will be discussed during the high-profile meeting between US President Donald Trump and Chinese leader Xi Jinping in South Korea later this week. This development comes as both nations seek to avoid further escalation in their ongoing trade dispute.
Key Agreements
According to Scott Bessent, the US Treasury Secretary, key points of agreement include:
- A “final deal” on TikTok’s operations in the United States. President Trump and his Chinese counterpart will discuss this matter during their meeting.
- A deferral of China’s tightened controls over rare earth minerals exports, with Beijing agreeing to delay implementation for a year while re-examining these measures.
- No anticipation of new 100% tariffs on Chinese goods that had been threatened by President Trump. The US president has accused China of becoming “very hostile” and trying to hold the world “captive.”
Furthermore, Bessent mentioned that China will resume substantial soybean purchases from the United States. The disagreement over soybeans was one of the contentious issues in their trade war as China is the world’s largest buyer of this commodity.
TikTok and Rare Earths Concerns
The TikTok issue has been a significant point of contention between the two countries, with the US seeking to separate its operations from Chinese ownership due to national security concerns. According to Bessent, a deal on TikTok’s US arm is already agreed upon, leaving Trump and Xi to “consummate that transaction” during their meeting.
Rare earth minerals are another critical issue. China processes approximately 90% of the world’s rare earths, materials essential for producing electronics such as solar panels and smartphones. The tightening of restrictions by China on these exports earlier this month led to renewed tensions between the two nations.
Background and Context
The trade dispute between the United States and China has been a long-standing issue. Since Trump’s re-election, he has imposed various tariffs on imports from different countries, including China, arguing that these measures would boost US manufacturing and jobs. However, this approach has faced criticism as many nations, including the UK, have struck deals with the US.
The tensions between the two largest economies in the world have not gone unnoticed by other nations in the region.
During his week-long tour of Asia, Trump announced new trade agreements with Malaysia and Cambodia and framework agreements with Thailand and Vietnam. These moves aim to strengthen America’s partnership with Southeast Asian countries, which are heavily reliant on trade with the US.
Future Implications
The agreement reached by the US and China is a crucial step towards de-escalating their trade war. However, significant details remain to be finalized before an official deal can be announced. The upcoming meeting between Trump and Xi in South Korea provides both leaders with an opportunity to address these remaining issues.
Both nations are aware of the potential economic impact of a prolonged trade dispute.
A resolution would not only benefit their economies but also stabilize global markets, which have been increasingly affected by the ongoing tensions. As such, all eyes will be on South Korea later this week to see if the meeting between Trump and Xi can pave the way for lasting peace in US-China relations.
