U.S.-China Trade Agreement Calms International Markets, Prevents Further Tariff Increases

China and the United States have come to an initial trade understanding that will prevent a planned 100% tariff increase on Chinese imports and postpone controversial restrictions on rare earth exports, U.S. Treasury Secretary Scott Bessent said, as cited by

. This arrangement, revealed just before a scheduled meeting between President Donald Trump and Chinese President Xi Jinping, represents a major step back from escalating trade disputes and seeks to bring more stability to their delicate economic ties.

Bessent called the framework "highly significant," noting that China has agreed to put off its expanded rare earth licensing rules for another year while reconsidering the policy,

reported. This decision sidesteps Trump’s November 1 tariff threat, which was prompted by China’s intentions to limit exports of essential materials for technology and defense. The agreement was reached during senior-level discussions in Kuala Lumpur, where U.S. Trade Representative Jamieson Greer met with Chinese Vice Premier He Lifeng and trade envoy Li Chenggang, according to .

The deal also involves China agreeing to restart large-scale purchases of U.S. soybeans, a major priority for American agriculture, and to address supply chains linked to fentanyl that contribute to the opioid crisis in the U.S., according to

. Bessent highlighted that this framework lays the groundwork for Trump and Xi to finalize details at their upcoming summit in South Korea. "We have secured agreements on rare earths, artificial intelligence, and trade," Bessent said, adding that the U.S. would use the threat of tariffs as leverage for further concessions, as reported by Cryptopolitan.

Chinese authorities have been reserved, refraining from sharing details about the breadth of the deal. Li Chenggang acknowledged that both sides had reached a preliminary agreement to extend the current trade ceasefire, set to expire November 10, and to continue talks on fentanyl and export controls, The Economic Times noted. The results of these negotiations are crucial for the global economy, as the U.S.-China trade partnership is a key pillar of worldwide financial stability.

Experts believe the agreement demonstrates both countries’ desire to prevent further economic shocks. Economists at ING expect a favorable outcome, pointing to a "softening of language" and Trump’s public statements about achieving a "fantastic deal," according to the

. At the same time, postponing rare earth export restrictions temporarily relieves supply chain worries for industries such as semiconductors and renewable energy that depend on these resources.

The framework also paves the way for future collaboration on artificial intelligence, with Bessent mentioning ongoing talks involving U.S. technology companies like Nvidia, as reported by Cryptopolitan. Nonetheless, larger geopolitical challenges—including the Taiwan issue and the detention of Hong Kong media mogul Jimmy Lai—remain unresolved and could complicate future relations.

Trump and Xi are scheduled to meet in South Korea on Thursday, with additional discussions planned in both China and the U.S. in early 2026, according to Cryptopolitan. Whether this framework succeeds will depend on the leaders’ ability to turn these initial agreements into concrete, enforceable measures. For now, the suspension of tariffs and rare earth disputes provides temporary relief for companies and investors navigating one of the world’s most significant trade relationships.