US China Nears Trade Truce Avoiding 100 Percent Tariffs

Treasury Secretary Scott Bessent announced a framework agreement between the U.S. and China that avoids the threatened 100% tariffs on Chinese goods, with China agreeing to delay export controls on rare earth elements and resume soybean purchases from the U.S. This framework is a strategic move by President Donald Trump aimed at buying time to decouple the U.S. rare earth element supply chain from China, while extracting concessions and rallying global support. China, with a weakening economy, has been preparing to counter U.S. tariff pressures by diversifying export markets, boosting technological self-sufficiency, and expanding domestic manufacturing, as outlined in its recent five-year plan emphasizing high-quality development. Despite ongoing trade tensions, China remains resilient, having reduced its economic dependence on U.S. exports and engaging in diplomatic efforts to present itself as a stable, pro-free trade alternative. Recent U.S.-China trade talks in Malaysia have eased tensions ahead of the Trump-Xi summit, leading to progress on issues including shipping fees, fentanyl export control, and access to TikTok. These developments have reduced safe-haven demand for the dollar, with markets anticipating a likely Federal Reserve rate cut amid ongoing U.S. government shutdown concerns.