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The US and China have agreed on a significant framework deal, which suspends the proposed 100% tariff on Chinese imports. The agreement announced on October 26, 2025, two days after the two countries held talks in Kuala Lumpur, follows months of growing trade actions and retaliations.
Scott Bessent, the US Treasury Secretary, attested that the negotiations had yielded a very substantial framework, which would not allow the imposition of further tariffs. President Donald Trump was optimistic about the deal, stating that it represented a significant step toward normalizing economic relations between the two largest economies in the world.
The framework proposes collaboration on several fronts, such as tariffs, export controls, fentanyl-related actions, and shipping fees. Both parties also agreed to discuss the exports of rare earth minerals, which have been a major issue in recent months.
Negotiations conducted within the Malaysian context covered mining of rare earths and agricultural trade. Bessent reported that the US anticipates that China would postpone its scheduled ban on rare earths sales by one year to revisit the policy. The move has the potential to alleviate the pressures on supply chains in sectors dependent on minerals, including electronics and renewable energy production.
Another agreement China made was to resume buying American soybeans, which is likely to boost US farmers who have experienced low demand in recent harvests. Moreover, the two countries decided to intensify collaboration to reduce the traffic of precursor drugs that are used to manufacture fentanyl, as one of the primary concerns of Washington.
Bessent also attested that the two parties reached an agreement on TikTok's US operations to ensure compliance with American law without hampering communication on future technology-related issues.
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Trade progress was favorable in global markets. The Hang Seng China Enterprises Index increased by 1.3%, and the MSCI Asia Pacific Index hit a new intraday record. Stakeholders in the US stock market also reacted positively to the announcement, indicating that investors were optimistic about improved relations between Washington and Beijing.
Soybean futures rose as much as 1.7% in Chicago, reaching a five-month high. Bitcoin also gained 3.73% over the last 24 hours, reaching a price of $115,850, according to CoinMarketCap. Analysts have observed that stable trade conditions typically favor cryptocurrencies and other high-risk assets, as reduced uncertainty leads to increased investment.
The framework is likely to be formalized by the upcoming meeting between President Trump and the Chinese leader Xi Jinping in South Korea. It is expected of leaders to agree on the final terms of the deal, which will be used to create a cooperative atmosphere in future trade dealings.
While the framework doesn't settle major conflicts, it marks progress in rebuilding trust. Both countries are committed to maintaining open dialogue and resolving disputes through consultations, which could stabilize markets and foster lasting economic ties.
