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The Tariff Tightrope

A Framework for US-China Trade and the Diplomacy of Economic Coercion

Sunday, 26 October 2025 17:43

Abstract

A preliminary trade agreement framework between the United States and China has been reached, de-escalating a volatile tariff conflict ahead of a high-stakes summit between President Donald Trump and Chinese leader Xi Jinping. The breakthrough, achieved on the sidelines of a regional summit in Malaysia, addresses critical issues including rare earth minerals, agricultural purchases, and the future of the social media platform TikTok. This diplomatic success is set against a backdrop of escalating trade tensions with other allies, underscoring a foreign policy approach that blends economic pressure with personal deal-making.

Averting the 100 Per Cent Cliff

Top economic officials from the United States and China announced on Sunday, October 26, 2025, that they had reached a “very substantial framework” for a trade agreement2,3,6,19. This preliminary consensus was achieved in Kuala Lumpur, Malaysia, during the Association of Southeast Asian Nations (ASEAN) summit2,4,6,13. The agreement is designed to de-escalate a trade war that had intensified earlier in the month2,9,18. US Treasury Secretary Scott Bessent and US Trade Representative Jamieson Greer met with their Chinese counterparts, Vice Premier He Lifeng and top trade negotiator Li Chenggang, for the fifth round of in-person discussions since May4,6,13. The most immediate effect of the framework is the avoidance of a new 100 per cent US tariff on Chinese goods, which President Trump had threatened to impose starting on November 12,4,6,15. Mr Bessent confirmed that the threat of these additional tariffs was now “effectively off the table”8,15,19. In return, the Chinese delegation agreed to defer its expanded export controls on rare earth minerals and magnets2,3,4,6. These critical minerals are essential components for advanced technologies, including defence systems and electronics, and China’s dominant position in their processing creates a strategic vulnerability for the US2,5. Mr Bessent suggested that China would delay the restrictions for approximately a year while the issue is re-examined2,15. The framework also includes a commitment from Beijing to make “substantial” purchases of US soybeans and other agricultural products, offering relief to American farmers who have struggled under previous Chinese boycotts2,3,4,19. Furthermore, the two nations agreed to cooperate on measures to address the US fentanyl crisis, a public health emergency that had previously been the basis for 20 per cent US tariffs on Chinese goods3,4,6,19.

The TikTok Resolution and the Leaders' Summit

The trade framework encompasses a resolution for the contentious issue of the social media platform TikTok4,6. Treasury Secretary Bessent stated that a “final deal” had been reached for the sale of the US operations of the app to American owners7,10,16. The transaction is expected to be formally “consummated” by President Trump and President Xi Jinping during their scheduled meeting on Thursday, October 30, in South Korea7,10,16. The deal follows an executive order signed by President Trump in September that paved the way for a new corporate structure with a majority of American investors10,16. Under the terms of the framework, TikTok’s Chinese parent company, ByteDance, and its affiliates are expected to retain less than a 20 per cent stake in the new US-based entity10,16. The high-stakes meeting between the two leaders is set to take place on the sidelines of the Asia Pacific Economic Cooperation (APEC) summit in South Korea10,14,18. This will be the first face-to-face meeting between Mr Trump and Mr Xi since the US president’s second term began, marking a critical inflection point in the economic conflict between the world’s two largest economies2,18. While the White House has officially announced the summit, Beijing has yet to formally confirm the face-to-face encounter4.

Diplomacy on the Periphery

The trade negotiations with China were the centrepiece of President Trump’s five-day swing through Asia, but the trip also served as a stage for other diplomatic manoeuvres14,15,18. Upon arriving in Kuala Lumpur, the president’s first official event was overseeing the signing of an expanded ceasefire agreement between Thailand and Cambodia6,8,13. The agreement was signed by Cambodian Prime Minister Hun Manet and Thai Prime Minister Anutin Charnvirakul, building on an initial truce brokered in July6,9. The conflict, which had flared up over a long-standing territorial dispute, had resulted in dozens of deaths and the displacement of hundreds of thousands of people8,12,13. Mr Trump took credit for resolving the conflict, stating that his threats of higher tariffs against both nations were the economic leverage that spurred the initial negotiations6,8,12,13. The expanded deal requires Thailand to release 18 detained Cambodian soldiers and mandates that both countries remove heavy weapons and landmines from the border area6,9,13. Following the ceremony, the US signed separate economic agreements with both Southeast Asian nations, including a non-binding memorandum with Thailand focused on cooperation in the rare earth minerals trade8,9,12. The president’s diplomatic style, which uses the threat of economic penalties to achieve foreign policy goals, was also on display in his dealings with North America13,14. While en route to Asia, Mr Trump announced a 10 per cent increase in tariffs on Canadian goods3,5,11. This escalation came in retaliation for the Canadian province of Ontario airing an anti-tariff television advertisement that featured a clip of former US President Ronald Reagan criticising trade barriers3,5,16,17. Mr Trump, who had previously terminated all trade negotiations with Canada over the ad, called the continued airing of the commercial a “hostile act”3,11,17. The new 10 per cent hike is an addition to existing levies, which include a 35 per cent tariff on Canadian goods not covered by the USMCA5,16.

The Specter of an Impromptu Summit

The final stop of the Asia tour in South Korea has been overshadowed by speculation of a potential, unscheduled meeting with North Korean leader Kim Jong-un4,7,15. President Trump stated he was “open to it” if the opportunity arose, noting his previous positive relationship with the North Korean leader4,15. South Korean officials, including the Unification Minister, suggested there was a “considerable” chance of an encounter, pointing to signs of cleaning and maintenance work at the border village of Panmunjeom4,10,14. The possibility of an impromptu meeting is reminiscent of the 2019 encounter at the Demilitarised Zone (DMZ)4,7. However, a senior US official, speaking on condition of anonymity, confirmed that a meeting with Mr Kim was “not on the schedule” for the trip10. The focus remains on the APEC summit and the highly anticipated trade discussions with President Xi10,15.

Conclusion

The framework agreement reached between the US and China represents a significant, if fragile, pause in the escalating trade war, providing a foundation for the leaders to finalise a deal that averts a major tariff escalation and resolves the contentious TikTok issue. The diplomatic activity across Asia, from the brokered ceasefire between Thailand and Cambodia to the renewed trade friction with Canada, illustrates a consistent foreign policy pattern: the use of economic pressure as a primary tool for both conflict resolution and bilateral negotiation. The success of the upcoming Trump-Xi summit in South Korea will determine whether this framework can transition from a temporary truce into a durable, comprehensive agreement, or if the underlying structural tensions between the world’s two largest economies will reassert themselves.

References

  1. Chinese and U.S. officials tentatively agree to avert 100 percent tariffs

    Supports the core facts about the trade deal framework, the negotiators, the location (Kuala Lumpur), the averted 100% tariffs, the rare earth mineral deferral, the agricultural purchases, and the fentanyl cooperation.

  2. US-China trade talks: Scott Bessent says 'substantial framework' reached; 100% tariffs, rare earth export clash averted - The Times of India

    Confirms the 'substantial framework' quote, the averted tariffs, the rare earth deferral, the agricultural and fentanyl components, and the planned Trump-Xi meeting in South Korea.

  3. US, China Strike Trade Deal Framework Ahead of Key Summit - Modern Diplomacy

    Provides details on the negotiators, the fifth round of talks, the averted 100% tariffs, the rare earth and fentanyl issues, the discussion of TikTok, and the speculation about a Trump-Kim Jong-un meeting.

  4. Trump raises tariffs on Canadian goods over Reagan advert - Yahoo News Canada

    Details the 10% tariff increase on Canada, the reason (the Ontario Reagan ad), the timing (Saturday, October 25), and the context of existing tariffs (35% levy).

  5. US and China agree on trade framework ahead of leaders' meeting - CNA

    Confirms the 'preliminary consensus' quote from the Chinese side, the negotiators, the averted 100% tariffs, the rare earth and fentanyl issues, and the discussion of TikTok.

  6. US and China reach 'final deal' on TikTok sale, treasury secretary says - The Guardian

    Provides the 'final deal' quote on TikTok from Scott Bessent and the plan for Trump and Xi to 'consummate that transaction' on Thursday in Korea.

  7. Trump oversees signing of 'historic' Thailand-Cambodia deal as week in Asia begins - ITVX

    Details the Thailand-Cambodia ceasefire signing, the names of the Prime Ministers, the use of economic pressure (tariff threats) to spur the truce, and the subsequent economic deals.

  8. Trump headlines ASEAN summit; Thailand-Cambodia sign ceasefire deal - Japan Today

    Confirms the expanded ceasefire deal, the signatories, the terms (removing heavy weapons, releasing 18 soldiers), and the context of the initial July truce and Trump's role.

  9. TikTok deal to be finalized Thursday, Treasury Secretary Scott Bessent says - CBS News

    Reinforces the TikTok deal finalisation date (Thursday) and location (Korea), the new corporate structure (majority US investors, ByteDance <20%), and the US official's statement that a Trump-Kim meeting is 'not on the schedule'.

  10. Trump announces 10% increase in tariffs on Canada for not pulling down ad sooner - The Hindu

    Confirms the 10% tariff increase, the reason (Reagan ad), the timing (Saturday, October 25), and the 'hostile act' quote from Trump's Truth Social post.

  11. What we know about the Thai-Cambodia truce deal touted by Trump - Malay Mail

    Details the casualties and displacement from the July conflict, the specific terms of the expanded ceasefire (landmines, ASEAN monitor, 18 soldiers), and the subsequent trade deals (rare earth MOU with Thailand, 19% tariff for Cambodia).

  12. Trump attends ceasefire ceremony with Thailand and Cambodia during Malaysia visit

    Confirms the ceasefire signing as Trump's first event in Kuala Lumpur, the use of economic pressure to spur the truce, and the 'historic day' quote from the Cambodian Prime Minister.

  13. Meeting with Xi Jinping, Kim Jong Un: Trump's Asia tour puts trade tariffs in focus - what's on the cards - The Times of India

    Confirms the Asia tour itinerary (Malaysia, Japan, South Korea), the high-stakes nature of the Xi meeting, and the South Korean official's belief that a Trump-Kim meeting was 'considerably likely'.

  14. U.S., China reach tentative trade deal at Asia summit - Los Angeles Times

    Supports the averted 100% tariffs, the expectation of substantial soybean purchases, the rare earth deferral, and the plan to discuss a global peace plan.

  15. Trump raises tariffs on Canada by 10% in retaliation for anti-tariff TV ad - The Guardian

    Details the 10% tariff increase, the Reagan ad's content (1987 speech), the 'hostile act' quote, and the context of existing tariffs (35% on non-USMCA goods, 50% on metals).

  16. Trump says all Canada trade talks 'terminated' over ad criticising tariffs - The Guardian

    Confirms Trump's termination of all trade negotiations with Canada on Friday over the ad and the content of the Reagan quote used in the commercial.

  17. Trump to meet with Xi as he travels to Asia to contain trade war - The Washington Post

    Provides context on the Trump-Xi meeting being the first of the second term, the location (South Korea economic summit), and the escalation of tensions over rare earth minerals.

  18. US and China say trade deal drawing closer as Trump and Xi prepare for meeting - OPB

    Confirms the 'preliminary consensus' and 'very successful framework' quotes, the averted higher tariffs, the expected substantial soybean purchases, the rare earth deferral, and the fentanyl cooperation.