The United States and China have shown signs of coming to an initial framework for a trade deal. Tensions between the two nations remain high. US Treasury Secretary Steven Mnuchin subsequently assured lawmakers that this was indeed the case. Chinese Vice Premier Liu He was talking after the two countries had established a good working framework for further consultations ahead of the Trump-Xi meeting. The finance ministers’ leaders are to meet Thursday for the first time in South Korea to work out more operational details.
As a key component of this still-in-the-works trade agreement, these concessions represent significant wins. In particular, Mnuchin stated that the countries would prevent implementation of proposed tariffs that would have increased risk of a deepening trade war between the US and China. This at least represents a huge breakthrough. Recently, Trump had threatened to place a 100% tariff on all Chinese imports.
Additionally, China will resume substantial soybean purchases from the US, which had been halted during the trade conflict, significantly impacting American farmers. The resumption of these purchases will provide important relief from the current challenges affecting US agricultural producers.
“I think we have addressed the farmers’ concerns.” – Scott Bessent
Furthermore, the discussions have resulted in a delay of one year on China’s tightening controls over rare earth minerals, which are crucial for various electronics and technologies. China now refines and processes about 90% of the world’s rare earths, which makes this concession doubly significant.
On the digital trade front, the two countries have made some progress on one of the world’s most popular video-sharing platform TikTok. The US has sought to separate TikTok’s US operations from its Chinese parent company, ByteDance, due to national security concerns. Like the previous deal, both Trump and Xi are supposed to hash out the details of this new deal at their meeting.
The negotiations have apparently been very positive, with both sides committed to reaching a compromise. Their good-faith discussions reportedly yielded substantial progress, the Chinese government claimed yesterday. This announcement is a hopeful indication of a thaw in relations after months of increasingly hostile rhetoric.
These advances come amid a long-standing trade war between the US and China. To make matters worse, both countries have slapped numerous tariffs on each other’s products, further intensifying the impact on the worldwide marketplace. Tariffs have been a key instrument of Trump’s administration trade policy thus far. Through tariffs, investment restrictions, and more, this strategy seeks to level the trade playing field and safeguard American industries.
In recent months, the US has concluded successful negotiations of trade deals with Malaysia and Cambodia. Further, it has concluded key frameworks with Thailand and Vietnam. These agreements indicate a strategic shift in US trade policy as it seeks to establish stronger economic ties with other nations while managing its complex relationship with China.
As the meeting between Trump and Xi gets closer, all of us will be watching closely. Will the leaders actually sign the agreements and pave a smoother road for their bilateral relations going forward? The result is the most important victory in decades—not just for U.S.-China bilateral trade relations, but for global economic stability.