Trump’s China Deal May Avert a Crisis of His Own Making

Trump administration officials have hailed the makings of a potential trade deal that could have China buy American soybeans and pause the introduction of its new licensing system on rare earth minerals, while the United States pauses or removes some of its tariffs.

It remains to be seen what might be agreed when President Trump meets the Chinese leader Xi Jinping this week. But those and the other measures that U.S. officials have mentioned appear to largely restore the relationship to a status quo from earlier this year, before Mr. Trump began his latest trade war with Beijing.

The United States and China have shown their willingness to repeatedly escalate trade tensions and hurt companies that do business across the Pacific, before walking back measures and striking a truce. But the truces have quickly crumbled, calling into question how durable a new agreement would be.

Speaking on ABC News on Sunday, Scott Bessent, the Treasury secretary, said American and Chinese negotiators who met in Malaysia over the weekend had “reached a substantial framework” for the two leaders to discuss when they meet in South Korea on Thursday.

He said that a 100 percent increase in United States tariffs on Chinese exports scheduled for Nov. 1 had been averted, and that China had agreed to delay a rare earths licensing system “for a year while they re-examine it.” The Chinese also agreed to help the United States stop the flow of chemical ingredients used to make illicit fentanyl, and make “substantial agriculture purchases for U.S. farmers,” Mr. Bessent said.

On social media, Brooke Rollins, the secretary of agriculture, praised the planned soybean purchases as “big news.” She added, “China’s commitment to make substantial purchases of U.S. soybeans brings the market BACK into balance and secures years of prosperity for American producers.”

But critics said the Trump administration appeared to be claiming credit for solving a crisis of its own making. China stopped its soybean purchases earlier this year, after it put a tariff on American soybeans in retaliation for the tariffs Mr. Trump had placed on Chinese products in April.

The Chinese government had clearly been developing its licensing system for rare earths for some time, and it introduced its first measures in December in response to technology restrictions from the Biden administration. But it greatly enlarged the system following Mr. Trump’s sweeping “Liberation Day” tariffs in April, then further expanded it this month, after the United States put new restrictions on providing technology to thousands of additional Chinese companies.

Paul Triolo, a partner at DGA-Albright Stonebridge Group, a consultancy, said the Trump administration had been pursuing a policy of “escalating to de-escalate,” which he called “a losing strategy.” He pointed out that this was the fifth meeting of trade talks that had been dominated by China’s curbs on rare earths.

“Both sides can hurt each other,” Mr. Triolo said. “All it’s done is reduce market share for companies across the board.”

Mr. Trump’s deal-making is famously unpredictable, and his meeting with Mr. Xi could result in other deals. Chinese officials have floated the possibility of more substantial purchases of U.S. products, as well as greater Chinese investment in the United States. In another interview, on NBC’s “Meet the Press,” Mr. Bessent said the two sides would probably discuss “more balanced trade,” geopolitical relations in the Middle East and Asia, and the conflict in Ukraine.

Markets have jumped at the news of a potential deal. But talks have been much less intensive than in Mr. Trump’s first term, when negotiators went back and forth for months to hammer out a 90-page trade agreement on issues ranging from intellectual property and banking to agriculture. On Friday, the Trump administration said it was beginning an investigation into China’s failure to comply with the terms of that agreement.

Jonathan A. Czin, a fellow at the Brookings Institution, a Washington think tank, pointed out that Mr. Xi was coming to the meeting after announcing China’s next five-year plan, which calls for intensifying the country’s focus on manufacturing and technology. Those plans run counter to longstanding American concerns about China’s trade practices, which ostensibly started their trade clash, he said. But those topics appeared absent from the agenda.

“It’s really striking to me that, not only are they not even discussing it, we’re discussing one issue at a time,” Mr. Czin said. “We’re talking about TikTok, or about soybeans, these kind of sectoral or even firm-specific issues, rather than talking about the big, meaty, substantive issue that may have been at the heart of this at the outset.”

Compared with Mr. Trump’s first term, both Washington and Beijing have been more willing to take dramatic actions against each other, to the detriment of companies that depend on the trading relationship. In Mr. Trump’s first-term trade war with China, he imposed tariffs of up to 25 percent on just a portion of China’s exports.

This time, in his first months in office, Mr. Trump put a 20 percent tariff on all Chinese exports, in return for the country’s role in channeling fentanyl to the United States. He added another 125 percent tariff that he later dropped to 10 percent. The administration has also placed fees on Chinese ships that dock in American harbors, expanded its technology controls, and threatened an additional 100 percent tariff on Chinese goods as of Nov. 1.

While most foreign governments have not retaliated against Mr. Trump’s aggressive trade policy, China has been an exception. Beijing responded to Mr. Trump’s measures with its own tariffs on U.S. exports, including soybeans. It also announced investigations into prominent companies based in the United States, like Nvidia and Qualcomm, and an “anti-discrimination” probe that could result in actions against American firms, in addition to the rare earths curbs.

American companies have been caught in the middle. Industry analysts say some factories are weeks away from stopping production if they do not receive more shipments of Chinese rare earth metals and magnets. And some firms worry that conflicting laws and directives from Beijing and Washington prevent them from complying with both.

Evan Medeiros, a professor at Georgetown University and a senior adviser at the Asia Group, said Chinese officials believed that they understood Mr. Trump better than in the first administration and knew how to retaliate more effectively.

The willingness of both the United States and China to take aggressive actions against each other was resulting in an “inherently unstable” situation that could undermine a truce, he said.

“Both sides are approaching the relationship with confidence. Both sides believe that the other needs them more than they do. And ultimately, both sides believe that they have an upper hand,” Mr. Medeiros said. It was, he said, “a very, very dangerous place to be.”