The US and China have agreed on the framework of a potential trade deal that will be discussed when their respective leaders meet later this week, according to US Treasury Secretary Scott Bessent.

Bessent stated that the agreement includes a 'final deal' regarding TikTok's US operations and a delay on China's tighter control over rare earth minerals.

He expressed optimism that the 100% tariff on Chinese goods, threatened by President Trump, would not materialize, while noting that China will resume significant soybean purchases from the US.

Both nations are eager to avoid further escalation in the ongoing trade war between the world's two largest economies.

Trump and Xi are set to hold discussions on Thursday in South Korea, with Bessent having met senior Chinese trade officials at the ASEAN summit in Malaysia. He reported that constructive discussions took place, leading to a substantial framework for the two leaders, with tariffs expected to be averted.

The Chinese government echoed these sentiments, stating that both negotiating teams reached a basic consensus addressing their respective concerns. Further details will be finalized moving forward.

Trump's Tariff Tactics

Since Trump resumed his presidency, he has implemented and threatened substantial tariffs on foreign imports to boost US manufacturing and jobs. The most significant levies have been aimed at China, which retaliated with its own measures. However, both sides agreed to halt new tariffs while working towards a trade deal.

The latest threats from Trump include a potential 100% tariff on Chinese goods due to increased restrictions on rare earth exports, crucial materials for electronics. China processes around 90% of the world's rare earths, which means their supply to US manufacturers could act as a bargaining chip.

Nonetheless, Bessent confirmed that China will delay tightening these export controls for at least a year.

TikTok Deal Progress

Bessent also mentioned that a deal regarding TikTok's US operations has been struck, awaiting Trump's and Xi's final agreement on Thursday. The US government has aimed to separate the app's US operations from its Chinese parent company due to national security issues.

After being initially mandated to sell its operations to avoid a ban, TikTok has seen deadline extensions while negotiations proceed.

In recent developments, the US has also initiated multiple trade agreements with Southeast Asian nations, aiming to strengthen economic ties and provide stable trade access amidst the ongoing tariff policies.