The breakthrough came during talks on the sidelines of the ASEAN Summit in Kuala Lumpur, where negotiators reached a provisional understanding to halt escalating trade measures that have unsettled global markets.

Tariffs and Rare Earth Controls Temporarily Suspended

According to U.S. Treasury Secretary Scott Bessent, the framework agreement will prevent the planned 100% tariffs on Chinese imports from taking effect on November 1. In exchange, Beijing is expected to delay implementation of its new licensing regime on rare earth minerals and magnets key materials used in high tech and defense industries for at least one year while the policy is reviewed.

“China is ready to make a deal,” Bessent said, calling the progress “a positive step toward restoring balance and predictability to global trade.”

If finalized, the deal would represent the most significant thaw in U.S.-China trade relations since tensions escalated earlier this year over technology access, investment restrictions, and export controls.

Background: A Longstanding Trade Rivalry

The United States and China have been locked in a protracted trade dispute over market access, intellectual property rights, and strategic technology. Successive rounds of tariffs since 2018 have disrupted supply chains and weighed heavily on both economies.

Washington has accused Beijing of unfair trade practices, while China has criticized U.S. tariffs as protectionist. Despite several rounds of negotiations and temporary truces, lasting progress has proven elusive making the current breakthrough particularly significant.

Global Implications

A formal agreement between the world’s two largest economies could ease pressure on global manufacturing and commodity markets, especially as supply chains continue to recover from pandemic era disruptions. Analysts say a temporary pause in tariff escalation may also boost investor confidence across Asia ahead of the holiday trading season.

Both Trump and Xi are scheduled to meet later this week to finalize the terms of the deal, which could define the next phase of bilateral economic engagement between Washington and Beijing.

This announcement comes shortly after both sides agreed to extend a temporary pause on tariffs for an additional 90 days, avoiding the implementation of steep duties on each other’s goods.

Bessent said Chinese President Xi Jinping had invited Trump to a meeting, but one had not been scheduled. “There’s no date,” Bessent said. “The president hasn’t accepted yet.”

Trump stated earlier this month that the U.S. and China were “getting very close to a trade agreement” and that he would meet Xi before the end of the year “if a deal was struck.”

Bessent also noted that the U.S. would need to see “months, if not quarters, if not a year” of progress on reducing fentanyl flows before considering any tariff reductions on Chinese imports.

U.S. officials have accused China of failing to adequately control the export of precursor chemicals used in the production of fentanyl, a leading contributor to overdose deaths in the United States. China has pushed back against those claims, defending its efforts and accusing the U.S. of attempting to “blackmail” them over the issue.

In February, Trump imposed 20% tariffs on Chinese imports due to the fentanyl dispute. Those tariffs remain in effect, along with an additional 10% base tariff, despite a fragile trade pause reached between both countries in May.

Trump’s comments came hours after U.S. Treasury Secretary Scott Bessent called current tariff levels “unsustainable” and said he expects a “de-escalation” in the trade war between the world’s two largest economies.

Under Trump’s latest trade directive, the U.S. imposed 145% import taxes on Chinese goods, prompting Beijing to retaliate with 125% tariffs on U.S. exports. The aggressive tariff regime has impacted global markets, slowed international trade, and triggered investor concerns over rising inflation and borrowing costs in the United States.

“The tariffs are hurting both sides, and neither side thinks the status quo is sustainable,” Bessent reportedly said during a closed-door policy briefing. His remarks, confirmed by two sources familiar with the meeting, were first reported by Bloomberg News and triggered a 2.5% rally in the S&P 500 index.

Despite the market rebound, uncertainty remains high. Economists warn that continued trade tensions may further strain U.S. consumers and exporters already grappling with higher prices and global supply chain disruptions.

Trump, speaking after the ceremonial swearing-in of Paul Atkins as the new chair of the Securities and Exchange Commission, acknowledged the market gains but remained cautious about future negotiations.

“China is going to be a slog in terms of the negotiations,” Bessent added, according to a transcript obtained by the Associated Press.

The White House has not confirmed any formal plans to alter existing tariffs, but analysts say the latest remarks could open the door to renewed talks aimed at easing tensions and stabilizing markets.

The proposal, presented by U.S. Treasury Secretary Scott Bessent during a visit to Kyiv on Wednesday, follows an earlier outline by Zelensky that would have opened Ukraine’s extensive natural resources to U.S. investment. However, President Zelensky expressed concerns over the lack of strong provisions to ensure Ukraine’s sovereignty and security in the deal.

A Controversial Proposal

According to three sources familiar with the discussions, the U.S. had suggested a 50/50 split of Ukraine’s critical minerals, including those essential for modern technologies, energy production, and military equipment. These minerals are vital not only for Ukraine’s economic recovery but also for its defense as the country continues to contend with the ongoing war with Russia.

Zelensky’s rejection of the deal underscores the delicate balancing act Kyiv faces in managing foreign investments while safeguarding its national interests. The Ukrainian president has previously emphasized the importance of protecting Ukraine’s sovereignty, especially in light of Russia’s invasion and ongoing aggression.

A Risk to National Security?

Zelensky’s refusal to sign the deal signals broader concerns about the long-term implications of foreign control over Ukraine’s critical resources. While the prospect of significant U.S. investment in Ukraine’s mineral wealth could help revitalize the country’s war-torn economy, there are fears that such an agreement could potentially undermine Ukraine’s control over its strategic resources.

Sources close to the Ukrainian government revealed that Zelensky is looking for a more robust security framework in any future agreements with foreign powers, particularly the U.S. The president has been vocal about ensuring that any deal benefiting Ukraine’s natural resources also prioritizes the country’s security and long-term stability.

U.S.-Ukraine Relations Under Scrutiny

This move comes at a critical moment in U.S.-Ukraine relations, as both countries navigate the complexities of military support and economic recovery efforts amidst Russia’s continued aggression. The U.S. has been one of Ukraine’s staunchest allies in its fight against Russia, but Zelensky’s rejection of the minerals deal highlights growing tensions over the terms of foreign involvement in the country’s recovery.

While the proposed deal was meant to attract much-needed investment into Ukraine’s mineral sector, Zelensky’s decision raises questions about the broader implications for Ukraine’s sovereignty and its approach to foreign partnerships.

Looking Ahead: Ukraine’s Resource Strategy

As Ukraine continues to recover from the devastating war, securing its mineral resources will be crucial for both economic growth and military defense. Zelensky’s rejection of the proposed U.S. deal signals that Ukraine is carefully considering the terms of its foreign partnerships, weighing the potential economic benefits against the need to protect its national interests.

With ongoing talks between Ukraine and its international partners, the next steps will likely involve negotiating more secure, mutually beneficial agreements that ensure the protection of Ukraine’s sovereignty while fostering growth and recovery.