U.S. and China Agree on Basic Framework for a New Trade Deal

What Happened?

Ahead of a meeting later this week between U.S. President Donald Trump and China’s President Xi Jinping, American and Chinese negotiators sounded confident they had reached an agreement on the framework for a new trade deal after meeting in Malaysia. U.S. Treasury Secretary Scott Bessent said the new arrangement would include a finalized deal on the future of TikTok, no 100% tariffs on Chinese goods, and the resumption of China purchasing American soybeans.

Representatives from the Chinese government issued a statement that both negotiating teams ‘reached a basic consensus on arrangements to address their respective concerns.’ 

Why it Matters

The signs of progress in trade negotiations between the United States and China could provide some needed stability to global markets that have been rattled by the increasing trade war between the two countries. According to Mr. Bessent, the new deal also includes an agreement on rare earths, which had been a previous point of contention between the U.S. and China. Both American and Chinese negotiators said they expected the details to be filled in later.

Mr. Trump embarked on a trip to the Southeast Asian region, and at the outset of the trip, he said, ‘Our message to the nations of Southeast Asia is that the United States is with you 100% and we intend to be a strong partner for many generations.’ Many Southeast Asian countries, such as Malaysia and Vietnam, are dependent on trade with the U.S., and they have been among those countries hardest hit by the Trump Administration's tariffs.

Another key issue to be resolved is the resumption of China’s purchasing of American soybeans. Due to previous tariffs imposed by the Trump Administration, China had stopped buying American soybeans, which had hurt American farmers. The issue was snowballing into a major domestic concern for the Trump Administration, since many midwestern farmers voted for Mr. Trump in 2024.

Globally, the trade spat between China and the United States has disrupted supply chains, slowed growth, contributed to a sluggish job market, and caused increasing inflation in Europe, Asia, and the Americas. If the new trade framework is adopted, and retaliatory tariffs between the United States and China come to a halt, it could help stabilize markets and bring a degree of much needed economic certainty to exporters and importers around the world.

Mr. Trump and Mr. Jinping are currently scheduled to meet on Thursday, October 30^th, to finalize the new trade agreement.

How it Affects You

After the trade war truce between the U.S. and China, stocks were up significantly in the U.S. over the weekend. A new trade deal would be a needed win for the Trump Administration, considering the continued U.S. government shutdown, which is already the second longest in U.S. history.