U.S. and China Reach Trade Truce, Avoiding New Tariffs
The United States and China have reportedly reached a truce in their ongoing trade dispute, averting the implementation of a 100% tariff on Chinese goods that was slated to take effect November 1, a move that could stabilize global markets.
Treasury Secretary Scott Bessent, speaking from Kuala Lumpur, Malaysia today, indicated that the threat of the additional tariff – an increase of 100% from current levels – is “effectively off the table.” He also stated that China has agreed to suspend plans for a worldwide export control regime, particularly concerning rare earth minerals crucial for electronics and automobile manufacturing. “We had a very good two days,” Bessent said, referring to meetings with Chinese Vice Premier He Lifeng. “We discussed a wide variety of issues, from the rare earth magnets to trade, to substantial purchases of American agricultural products, to the Chinese helping us in this fentanyl crisis that we have in the US.”
The agreement also addresses concerns from American farmers, who have been impacted by China’s boycott of U.S. soybeans. Bessent stated that farmers “are going to be extremely happy with this deal for this year and for the coming years,” though specific details were not disclosed. The administration has already provided at least $3 billion in financial aid to farmers to offset losses from the trade war. A recent report from the USDA Economic Research Service details the impact of trade policies on the agricultural sector. Furthermore, a final deal on TikTok has been reached, with China approving the terms of a transaction that will be formalized by the two leaders on Thursday in Korea.
Despite the positive developments, Bessent criticized Democratic senators for holding up funding for the U.S. government, calling it a “global embarrassment” and warning of potential economic consequences, including disruptions to air traffic and delayed pay for military personnel. He also dismissed claims that a $20 billion swap line with Argentina harmed U.S. farmers, asserting that the Exchange Stabilization Fund has never lost money. Bessent also downplayed the impact of Russian propaganda regarding sanctions, stating that Russia’s oil earnings are already down 20% year over year.
President Trump and President Xi are expected to finalize the agreements reached during the negotiations when they meet in Korea on Thursday.
