US tees up sweeping trade deal with China ahead of Trump-Xi meeting

 The US has reached a tentative deal with China that will stave off the threats of massive tariffs and trade restrictions as Donald Trump prepares to meet Xi Jinping later this week.

On Sunday, Treasury Secretary Scott Bessent said the two nations had reached a “substantial framework” after discussing a “wide range of issues” with his Chinese counterpart.

Mr Bessent said the agreement took Mr Trump’s threat of 100pc tariffs of China “effectively off the table” and that China would delay a threat to curb exports of rare earth minerals that are critical to weapons and high-tech items such as electric car batteries.

Both sides also said they would work together to combat imports of fentanyl into the United States.

Fears of a new trade war between the US and China have risen in recent weeks after Beijing unveiled new powers to restrict exports of rare earths, supplies of which China dominates.

Mr Trump responded by promising an additional 100pc tariff on China and threatening to pull out of a planned meeting with Mr Xi.

‘Good deal with China’

US and Chinese officials have been locked in two days of trade talks in Malaysia ahead of a meeting between the two presidents in Korea on Thursday, the first since 2019.

“I would expect that the threat of the 100pc has gone away, as has the threat of the immediate imposition of the Chinese initiating a worldwide export control regime,” Mr Bessent told CBS News.

He added that the deal would include “substantial purchases” of American soybeans.

China is a significant purchaser of American soybeans, one of the country’s biggest exports. China imported $13bn (£10bn) of soybeans from the US last year, but imposed huge tariffs on imports in March, and imported none in September. The stand-off has created financial hardship for farmers, with Mr Trump calling it an “economically hostile act”.

Mr Trump and Mr Xi are also expected to consummate a deal for US investors to acquire TikTok’s American operations.

A group of investors, including tech giant Oracle and private equity group Silver Lake, have agreed a preliminary deal to buy TikTok after years of concerns about the video app’s Chinese ownership, although many aspects of the deal remain unclear. 

Billionaires Rupert Murdoch and Michael Dell may also have a role in the deal.

The deal is also expected to cover levies on shipping. Both countries have begun charging the others’ ships to dock in their ports in recent weeks, raising transport costs.

Li Chenggang, the Chinese trade envoy, said that the “current turbulences and twists and turns are ones that we do not wish to see”. He said the two sides had reached a “preliminary consensus”.

The US announced separate trade deals with Malaysia and Cambodia on Sunday. The Malaysia deal includes a critical minerals pact, designed to give the US alternative access to critical minerals in the event of further tensions with China.

Speaking in Kuala Lumpur, Mr Trump predicted a “good deal with China”. “They want to make a deal, and we want to make a deal,” he added.

The proposed deal is likely to reassure investors. The threat of further tariffs from Mr Trump sent stock markets reeling earlier this month, although they have since hit record highs as the US president has softened his tone.