U.S.-China provisional agreement on tariff truce…withdrawal of additional tariffs on China, one-year suspension of rare earth export controls

Conciliatory measures ahead of the summit on the 30th

Agreement reached at high-level trade talks between both sides

Convergence on soybean purchases and blocking fentanyl inflows

Final agreement reached on TikTok acquisition

Trade conflict likely to be contained rather than escalated

China will suspend controls on rare earth exports for one year, and the United States will not impose the 100% additional tariffs it had threatened against China, according to reports. This measure was agreed at high-level talks between the two sides ahead of the U.S.-China summit to be held in Korea on the 30th. The likelihood has increased that the U.S. and China will avoid a collapse at the summit and extend the tariff truce.

On the 27th, China’s state-run Xinhua News Agency and Bloomberg News reported that delegations led by U.S. Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng reached a tentative agreement at high-level trade talks held the previous day in Kuala Lumpur, Malaysia. Accompanying U.S. President Donald Trump on his Asia tour, Secretary Bessent said in an interview with U.S. media the day before that he believes China’s controls on rare earth exports will be suspended for one year. He also said he expects the U.S. will not impose the 100% additional tariffs on China. The U.S. and China have agreed to sheathe the "swords" they drew on each other earlier this month. China had initially announced that it would further tighten controls on rare earth exports this month, and the U.S. had responded by warning of 100% additional tariffs on China.

Secretary Bessent also said, "We agreed on large-scale purchases of agricultural products for U.S. farmers," and that "China agreed to begin helping to address the issue of fentanyl precursor substances that are devastating the United States." He said there was also convergence on the halt in China’s purchases of U.S. soybeans and on blocking fentanyl inflows, another key issue in U.S.-China trade talks.

Regarding the "TikTok agreement," in which the U.S. side would acquire TikTok's U.S. business rights, Secretary Bessent said, "We have reached a final agreement," adding, "As of today all details have been coordinated, and the two leaders will finalize that agreement on Thursday (the 30th) in Korea."

Xinhua also reported, "The two countries held frank and in-depth negotiations on the U.S. Section 301 measures against China's maritime, logistics, and shipbuilding industries, the extension of the mutual tariff suspension period, cooperation on fentanyl-related tariffs and law enforcement, agricultural trade, and export controls," and "they reached a basic agreement on plans to address each other's concerns."

Accordingly, the U.S. and China are expected to extend the tariff truce that is set to expire on the 10th of next month. The reason the U.S. and China quickly found a compromise is the economic damage caused by the spread of trade conflict. China’s economic growth rate is falling rapidly, and the United States finds it difficult to quickly secure an alternative supply chain for the rare earths market dominated by China.

Beijing = Kim Eun-jung, correspondent kej@hankyung.com