US and China Agree on Temporary Ceasefire Over Rare Earths and Tariffs
US and China Agree on Temporary Ceasefire Over Rare Earths and Tariffs
During high-level talks held at the ASEAN Summit in Kuala Lumpur, trade officials from the US and China reached agreement on a trade ceasefire framework to be approved by both countries' leaders, Donald Trump and Xi Jinping, this week. As a result of the talks, a preliminary decision was made to suspend the 100% customs tariffs that the US planned to implement on November 1 and to defer China's new restrictions on rare earth element exports for one year.
US Treasury Secretary Scott Bessent announced that negotiations conducted behind the scenes at the ASEAN meeting had prevented Trump's tariffs from taking effect and that China would postpone its rare earth minerals and magnet licensing regime by one year. However, Chinese officials made more cautious statements regarding the outcome of the talks and did not share details.
Trump and Xi are expected to meet on the sidelines of the APEC Summit to be held in Gyeongju, South Korea. Following the fifth in-person meeting with Chinese Vice Premier He Lifeng and trade negotiator Li Chenggang, US Trade Representative Jamieson Greer stated that "a successful framework for the leaders to discuss has been established."
Bessent said he expects the tariff ceasefire to extend beyond November 10 and China to resume soybean purchases from the US. In September, China purchased no soybeans from the US, instead turning to supplies from Brazil and Argentina. With the agreement taking effect, US farmers are expected to see a positive impact over the coming several seasons.
Greer stated, "Both sides agreed to stop certain sanctions and find a way for the US to gain greater access to rare earth elements from China." In parallel, the parties are reported to have evaluated new export plans aimed at balancing the US trade deficit.
Chinese representative Li Chenggang noted that the two sides had reached a "preliminary understanding" but that decisions would go through each country's internal approval processes. Li stated, "The US stance was firm, but China was also determined to protect its own interests. We conducted comprehensive consultations and sought a constructive solution."
After arriving in Malaysia, the first stop on his Asia tour, Trump signaled optimism by saying "I believe we will make a deal with China." The US President had previously announced he would impose new tariffs at a 100% rate in retaliation for China's export controls on rare earth elements. China controls more than 90% of the world's rare earth elements, and these materials are critical for electric vehicles, semiconductors, and defense technologies.
The talks also addressed issues including the fentanyl crisis, US port entry fees, the transfer of TikTok to US ownership, the Taiwan issue, and the release of Hong Kong media tycoon Jimmy Lai. Bessent stated that the technical details of the TikTok agreement would be clarified at Trump and Xi's meeting in South Korea.
Trump announced that he and Xi will hold new meetings in the future in both China and the US. These talks are expected to cover key topics including trade deficits, security concerns, and Taiwan policy.
In recent weeks, trade tensions between the two countries have escalated again, with China's export controls on rare earths particularly creating imbalances in global supply chains. This latest development marks a new phase regarding the geopolitical importance of access to critical raw materials in global technology production.
Key Points:
The US and China reached agreement on a trade ceasefire framework at the ASEAN Summit in Kuala Lumpur.
The US's 100% customs tariffs were suspended, and China's rare earth export licenses were deferred for one year.
Scott Bessent stated that the agreement would revive soybean trade.
Instead of the Transportation Safety Board of Canada (TSB), US Treasury and China's Ministry of Commerce conducted these negotiations.
The transfer of TikTok to US ownership was one of the key topics in the talks.
Li Chenggang confirmed that the two sides had reached a "preliminary understanding."
China holds more than 90% of global rare earth supply.
The agreement is expected to be approved by Trump and Xi on the sidelines of the APEC Summit in Gyeongju.
The talks also covered the fentanyl crisis, Taiwan, and human rights issues in Hong Kong.
The new agreement has brought the role of strategic minerals in global supply chains back into focus.
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