Trump administration officials welcomed the prospect of a possible trade deal that could see China buy American soybeans and suspend the rollout of its new licensing system for rare earth minerals, while the United States suspends or repeals some of its tariffs.
It remains to be seen what might be agreed upon when President Trump meets Chinese leader Xi Jinping this week. But these and the other measures U.S. officials have mentioned appear to largely restore relations to the status quo of earlier this year, before Mr. Trump began his latest trade war with Beijing.
The United States and China have repeatedly shown a willingness to escalate trade tensions and harm companies operating across the Pacific before rolling back their actions and reaching a ceasefire. But the ceasefires quickly fell apart, casting doubt on the durability of a new agreement.
Treasury Secretary Scott Bessent said on ABC News Sunday that American and Chinese negotiators who met in Malaysia over the weekend had “reached a substantive framework” that the two leaders could discuss when they meet Thursday in South Korea.
He said a 100 percent increase in U.S. tariffs on Chinese exports planned for Nov. 1 had been averted and that China had agreed to delay a rare earths licensing system “for a year while it re-examines it.” The Chinese also agreed to help the United States stop the flow of chemical ingredients used to make illicit fentanyl and to make “significant agricultural purchases for U.S. farmers,” Bessent said.
On social media, Agriculture Secretary Brooke Rollins praised the planned soybean purchases as “big news.” She added: “China's commitment to large purchases of U.S. soybeans rebalances the market and ensures years of prosperity for American producers.”
But critics said the Trump administration appeared to be taking credit for solving a crisis of its own making. China halted its soybean purchases earlier this year after imposing tariffs on American soybeans in retaliation for tariffs that Mr. Trump imposed on Chinese products in April.
Apparently, the Chinese government has been developing its rare earth licensing system for some time and introduced initial measures in December in response to the Biden administration's technology restrictions. But the system was significantly expanded following Mr. Trump's sweeping “Liberation Day” tariffs in April and expanded further this month after the United States imposed new restrictions on providing technology to thousands more Chinese companies.
Paul Triolo, a partner at consulting firm DGA-Albright Stonebridge Group, said the Trump administration had pursued a policy of “escalation to de-escalation,” which he called a “loser strategy.” He noted that this is the fifth meeting of trade talks that has been dominated by China's restrictions on rare earths.
“Both sides can hurt each other,” Mr. Triolo said. “All this has accomplished is reducing corporate market share across the board.”
Mr. Trump's business deals are notoriously unpredictable, and his meeting with Mr. Xi could lead to more deals. Chinese officials have raised the possibility of larger purchases of U.S. products as well as greater Chinese investments in the United States. In another interview on NBC's “Meet the Press,” Mr. Bessent said the two sides would likely discuss “more balanced trade,” geopolitical relations in the Middle East and Asia and the conflict in Ukraine.
Markets have rejoiced at news of a potential deal. But the talks were far less intense than in Mr. Trump's first term, when negotiators went back and forth for months trying to hammer out a 90-page trade deal on issues ranging from intellectual property to banking to agriculture. On Friday, the Trump administration said it would launch an investigation into China's failure to comply with the terms of that agreement.
Jonathan A. Czin, a fellow at the Brookings Institution, a Washington think tank, noted that Mr. Xi came to the meeting after announcing China's next five-year plan, which calls for the country to focus more on manufacturing and technology. Those plans conflict with long-standing American concerns about China's trade practices that allegedly sparked the trade conflict, he said. But these issues did not appear to be on the agenda.
“It really strikes me that not only are they not even discussing it, but we are just discussing one issue at a time,” Mr. Czin said. “We're talking about TikTok or soybeans, those sorts of sectoral or even company-specific issues, rather than the big, weighty, substantive issue that may have been the focus at the beginning.”
Compared to Mr. Trump's first term, both Washington and Beijing have been more willing to take dramatic action against each other, to the detriment of companies that rely on the trade relationship. In Trump's first trade war with China, he imposed tariffs of up to 25 percent on only a portion of Chinese exports.
This time, Mr. Trump imposed a 20 percent tariff on all Chinese exports in his first months in office in exchange for the country's role in funneling fentanyl into the United States. He added another tariff rate of 125 percent, which he later reduced to 10 percent. The government has also imposed fees on Chinese ships docking at American ports, expanded its technology controls and threatened an additional 100 percent tariff on Chinese goods starting November 1.
While most foreign governments have not retaliated against Mr. Trump's aggressive trade policies, China has been an exception. Beijing responded to Mr Trump's actions with its own tariffs on US exports, including soybeans. It also announced investigations into well-known US-based companies such as Nvidia and Qualcomm, as well as an “anti-discrimination” investigation that could lead to action against American companies in addition to rare earth restrictions.
American companies are caught in the middle. Industry analysts say it will take just weeks for some factories to halt production if they don't receive further shipments of Chinese rare earth metals and magnets. And some companies fear that conflicting laws and policies from Beijing and Washington are preventing them from complying with both regulations.
Evan Medeiros, a Georgetown University professor and senior adviser to the Asia Group, said Chinese officials believed they understood Mr. Trump better than in the first administration and knew how to hit back more effectively.
The willingness of both the United States and China to take aggressive actions against each other is creating an “inherently unstable” situation that could undermine a ceasefire, he said.
“Both sides approach the relationship with confidence. Both sides believe the other needs them more than they do. And ultimately, both sides believe they have the upper hand,” Mr. Medeiros said. It was, he said, “a very, very dangerous place.”