US-China understanding on tariffs, soya, rare earths and TikTok. Towards Trump-Xi summit
US-China agreement on tariffs, 100% avoided and new trade tensions
China and the United States have reached a agreement on tariffs. After two days of tight talks, negotiators announced a preliminary understanding that averts further 100% tariffs against Beijing and paves the way for Xi Jinping and Donald Trump to meet. The two leaders will now have the task of finalising it on Thursday at their scheduled meeting in South Korea.
Meanwhile, Wall Street stock futures advanced with the preliminary agreement. Futures on the S&P 500 rose 0.7 per cent, those on the Nasdaq 0.9 per cent.
The understanding eases the tension between the two economic superpowers and seems to avert an imminent all-out trade war. Details provided so far are vague. Treasury Secretary Scott Bessent spoke of an understanding on soy and rare earths, with China agreeing to delay the entry into force of export restrictions for a year, reselling the measure in the meantime. The Chinese delegation spoke of a 'positive consensus', of a negotiation that puts them on the right track, but offered no reference in its report to rare earths, for which Trump has launched his 'Asia campaign'.
100% rates
On his tour of Malaysia, Japan and South Korea, the president intends to sign agreements with other countries - he has already done so with Malaysia - to obtain essential minerals and thus reduce American dependence on Beijing. Thanks to the 'substantial' framework agreement reached, the trade truce between the United States and China - explained Bessent - will be extended beyond the current deadline of 10 November. 100% further tariffs against Beijing are also 'off the table', assured the Treasury secretary, sending a soothing message to the markets, which have been nervous for weeks about the possible entry into force on 1 November of the new tariffs announced by Trump in response to Beijing's recent rare earths squeeze.
Ukraine and Taiwan in the background
The agreement lays the foundations for a positive face-to-face meeting between the American and Chinese presidents, the first since 2019. The two leaders' agenda is full: in addition to tariffs, the war in Ukraine, and the pressure Xi can exert on Vladimir Putin in view of the 'friendship without limits' that binds them, will be at the centre of the confrontation. A confrontation on Taiwan, a thorny issue in relations between the two countries, is also not excluded.
