US-China Trade Negotiations: A Framework Deal Emerges Ahead of Trump-Xi Summit

US-China trade negotiations have reached a preliminary consensus, paving the way for a potential deal as Presidents Donald Trump and Xi prepare for their high-stakes meeting in South Korea. Top negotiators from both sides announced the framework after intense discussions in Kuala Lumpur, addressing tariffs, export controls, and other contentious issues.

Key Developments in the Talks

US Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer met with Chinese Vice Premier He Lifeng and negotiator Li Chenggang for the fifth in-person round since May. Bessent described the outcome as a “very successful framework” for the leaders’ discussion, covering rare earths, fentanyl tariffs, soybeans, and shipping fees. Li Chenggang confirmed a “preliminary consensus” after “candid and in-depth” exchanges, with both sides now undergoing domestic approvals.

The agreement aims to avert escalation, including Trump’s threatened 100% tariffs on Chinese goods in retaliation for Beijing’s export curbs on rare earth minerals. China, the US’s largest soybean buyer, has imported half of America’s $24 billion in exports in recent years. Bessent expressed optimism for a “fantastic meeting,” while Greer emphasized mutual respect and equal consultation.

Historical Context and Stakes

The talks build on a fragile truce from Trump’s first term, which collapsed amid repeated escalations. Issues like intellectual property, banking, agriculture, and export controls remain central. Trump’s Asia trip, including the ASEAN-U.S. Summit, sets the stage for Thursday’s summit. A deal could ease global supply chain strains, benefiting industries from car production to semiconductors.

Implications for Markets and Beyond

Markets reacted positively, with US futures rising—Dow up 0.66%, S&P 500 0.75%, Nasdaq 0.91%. A resolution could stabilize trade, reduce inflation risks, and boost economic growth. However, experts caution that past truces have crumbled quickly, questioning durability amid ongoing tensions.

In summary, the US-China framework signals progress toward de-escalation, but the Trump-Xi summit will determine if it leads to a lasting trade deal.