The United States and China reached a framework agreement on trade before the Trump-Xi meeting. Here’s what we know

U.S. and Chinese officials have reached a framework agreement, avoiding a potentially ruinous 157% tariff on Chinese goods while paving the way for a possible trade deal to be discussed between President Donald Trump and Chinese leader Xi Jinping later this week.

The apparent progress took place during the first part of Trump’s term. diplomatic tour in Asiaeasing tensions between the world’s two largest economies after weeks of escalating actions they inflicted on each other.

Asian markets and US stock futures reacted positively to this news. Here’s what we know so far about the talks.

U.S. and Chinese negotiators held their latest round of negotiations in the Malaysian capital of Kuala Lumpur, the first stop on Trump’s whirlwind diplomatic tour of Asia.

And it was shortly after Trump landed on Sunday that the first positive signs of trade negotiations emerged.

“I think we’ve reached a substantive framework for the two leaders to meet next Thursday,” Treasury Secretary Scott Bessent said on ABC from Kuala Lumpur, where he and Trade Representative Jamieson Greer were leading the U.S. delegation for the fifth round of in-person talks.

He also told CBS News that the 100% tariffs on Chinese goods that Trump previously threatened were “effectively out of the question.”

All eyes are now on the expected meeting Thursday between Trump and Chinese leader Xi Jinping in South Korea, which already been colored by questions of whether it will even happen.

The meeting, the first between the two men during Trump’s second term, would take place on the sidelines of the Asia-Pacific Economic Cooperation CEO Summit, where Trump is expected to deliver a speech.

Beijing has not yet confirmed that the meeting will take place, but this is not unusual given that the Chinese government rarely does so before such negotiations are underway.

But the latest signals from trade negotiators in Malaysia set a more positive tone heading into the closely watched meeting.

Rare earths and soy

Friction between the two countries quickly escalated in September after the United States expanded its export blacklist to significantly harm Chinese companies’ access to American technology, while China tightened its own export controls on rare earth minerals.

Beijing’s expanding restrictions on critical minerals, of which China holds a near-monopoly role in processing, prompted Trump to pledge to impose new 100% tariffs on Chinese imports, which were initially scheduled to take effect in November.

Neither side has provided full details of the framework, but Bessent said on NBC that he expects the United States to get “some sort of deferment” on rare earth export controls, adding that the framework allows Trump and Xi “to have a very productive meeting.”

He also told CBS that China would make “substantial” purchases of U.S. soybeans. Soybean farmers in states like Illinois, Iowa, Minnesota and Indiana have harvested this fall without purchase orders from Chinaonce the largest buyer of U.S. soybeans.

On fentanyl, Bessent said he reached an initial agreement on further cooperation to stem the flow of the illegal drug’s precursor chemicals into the United States.

Additionally, he said the two sides had reached a “final agreement on TikTok,” whose U.S. assets must be sold to U.S. buyers under U.S. law. The United States and China finalized an agreement on the popular short video app after the Madrid talks.

“As of today, all the details are worked out, and it will be up to both leaders to complete this transaction,” Bessent said.

“Shocks and fluctuations”

On Sunday, Chinese state media Xinhua said U.S. and Chinese trade negotiators have reached a “preliminary consensus” on how to address their “respective concerns.”

Li Chenggang, China’s top trade negotiator who led the Chinese delegation with Vice Premier He Lifeng, said the two sides engaged in in-depth conversations to address issues such as special U.S. port taxes on Chinese-built ships, extension of the trade truce, tariffs on fentanyl as well as cooperation in combating illegal drugs, as well as export controls.

“The shocks and fluctuations” between the two countries over the past month were “not what China wanted to see.” Li told reporters after Sunday’s negotiations, while emphasizing that China remains firm in safeguarding its interests despite the tough stance of the United States.

“Both parties agreed to further finalize specific details and complete their respective national approval processes,” the statement said.