Trade relations between the United States and China took a measured step forward as officials from both countries reached a framework agreement to pause upcoming tariffs and delay rare earth export restrictions. The development came during the first day of President Donald Trump’s Asia diplomacy tour, offering a rare moment of calm amid months of trade strain between the world’s two largest economies.

U.S. Treasury Secretary Scott Bessent confirmed that the talks in Kuala Lumpur eliminated the immediate risk of Trump’s proposed 100% tariffs on Chinese imports. He also said that China would delay its planned export licensing system for rare earth minerals by one year, giving negotiators time to finalize a longer-term solution. Both measures aim to stabilize trade flows that have been on edge since midyear.

Progress Toward a Broader Agreement

According to Reuters, the weekend discussions between U.S. Treasury Secretary Bessent, Trade Representative Jamieson Greer, and China’s Vice Premier He Lifeng built the groundwork for a possible deal to be reviewed by Trump and President Xi Jinping later this week. While the White House confirmed plans for the two leaders to meet during the upcoming APEC summit in South Korea, Chinese officials have not yet publicly confirmed Xi’s attendance.

Chinese negotiator Li Chenggang said the two sides reached a “preliminary consensus” on several key points, emphasizing that both nations will now move through their internal approval processes. He described the talks as “intense but constructive”, suggesting that progress was made without offering specific commitments.

For now, the proposed arrangement would extend the existing tariff truce beyond its November 10 expiration and reopen China’s purchases of U.S. soybeans, a move expected to provide relief for American farmers who saw shipments decline sharply in recent months.

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Trump’s First Stop: Malaysia

Trump’s Asia diplomacy tour began in Malaysia, where he attended the ASEAN summit and signed a regional peace declaration. The event was marked by a mix of ceremony and light moments, including friendly exchanges with regional leaders.

While the summit centered on diplomacy, Trump’s focus remained on the U.S.-China trade talks and his upcoming meeting with Xi. The president told reporters he was “optimistic about reaching a deal”, though both sides acknowledged that final terms would depend on Thursday’s discussions.

CNN reported that alongside trade, Trump is expected to press Xi on broader geopolitical issues, including China’s role in influencing Russia and ongoing tensions over Taiwan and Hong Kong. However, U.S. officials clarified that the priority this week is stabilizing economic relations after months of tariff and export disputes.

Market Reaction: Crypto and Stocks Rise

News of easing trade tensions between the U.S. and China immediately lifted investor sentiment. According to CoinDesk, Bitcoin climbed above $113,000, its highest level in nearly two weeks, as traders responded to signs of progress in the negotiations. Ethereum, Solana, and Cardano also saw notable gains, while global equity markets hit record highs on optimism about reduced trade risk.

Analysts say the renewed cooperation helped restore confidence in risk assets that had been pressured by months of uncertainty. U.S. Treasury yields steadied, gold prices retreated slightly, and major indexes closed the week with strong gains, signaling a short-term recovery in global risk appetite.

Still, experts caution that this optimism remains fragile. With the Federal Reserve’s policy meeting just days away and the Trump–Xi summit pending, market stability will depend on whether this framework turns into a lasting trade agreement.

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What Comes Next

As Trump’s Asia diplomacy tour continues, attention will turn to the APEC summit in South Korea, where the two leaders are expected to review and possibly sign off on the tentative trade framework. If finalized, it could mark a pause in a multi-year cycle of tariffs, export restrictions, and retaliatory measures that have strained U.S.-China trade.

For now, the tentative progress in talks has calmed markets and softened rhetoric from both sides. Whether this marks a lasting improvement or another brief truce in U.S. and China trade tensions will depend on how the week’s diplomacy unfolds.