Washington: The US and China have reached a preliminary agreement on the framework of a potential trade deal, which will be the focal point of discussions when President Donald Trump and Chinese President Xi Jinping meet later this week. This development was confirmed by the US Treasury Secretary, as reported by CBS, a US news partner of the BBC.
According to BBC, the framework includes a deal concerning the US operations of TikTok and a temporary deferment of China's stringent controls on rare earth minerals. The Treasury Secretary expressed optimism that the proposed 100% tariff on Chinese goods, previously threatened by President Trump, would not be implemented. Concurrently, China has agreed to resume sizable soybean purchases from the US, alleviating some of the trade tensions between the two nations.
The Chinese government released a statement acknowledging that both countries had reached a "basic consensus" on resolving mutual concerns. Furthermore, both parties have agreed to continue refining the specific details of the agreement.
Since Trump's return to the White House, his administration has adopted a strategy of imposing and threatening significant tariffs on imports, claiming it as a means to revitalize US manufacturing and employment. While this approach has led to new trade agreements with several countries, China has been the target of the most severe tariff threats. In response, China has enacted retaliatory measures, although both countries have agreed to suspend these actions while negotiating a trade deal.
Earlier this month, Trump announced plans for a 100% tariff on Chinese goods, in reaction to China's tightened export controls on rare earth materials, which are crucial for the production of numerous electronic devices. China, processing approximately 90% of the world's rare earths, wields significant influence over their supply, positioning it as a critical point of negotiation. However, China has agreed to defer these controls for a year to allow for further discussions.
The trade conflict has also impacted US soybean farmers, as China, the largest global buyer of soybeans, halted all orders amid the escalating trade war. The Treasury Secretary, who also has a personal stake in soybean farming, hinted at a resolution to this issue, suggesting that US farmers will benefit from the impending trade deal announcement.
Additionally, an agreement has been reached regarding TikTok's US operations, with the finalization of the deal pending the upcoming Trump-Xi meeting. The US aims to separate TikTok's US operations from its Chinese parent company, ByteDance, due to national security concerns. While a ban was initially threatened, Trump has extended the deadline for negotiations, with an agreement that American companies will control TikTok's algorithm and hold the majority of board seats for its US operations.
In related developments, the US announced new trade agreements with Malaysia and Cambodia, as well as framework agreements with Thailand and Vietnam. These countries, heavily reliant on US trade, have been significantly impacted by Trump's tariffs. While the US will retain tariffs of up to 20% on goods from these countries, exemptions for specific products are possible.
During his visit to Malaysia, Trump emphasized the US commitment to its Southeast Asian partners, stating, "Our message to the nations of Southeast Asia is that the United States is with you 100% and we intend to be a strong partner for many generations." Agreements were signed to enhance US access to critical minerals from the region, reducing dependency on China.
The White House and Vietnam also announced enhanced trade access, with Vietnam agreeing to purchase Boeing jets valued at over $8 billion and American agricultural products, signaling a strengthening of bilateral trade relations.