Trump and Xi about to strike the biggest trade deal in years: Here’s what’s inside

The U.S. and China have reached a preliminary agreement on key trade flashpoints, setting the stage for Donald Trump and Xi Jinping to finalize a sweeping deal this week that could defuse escalating tensions, lift markets, and delay a new rare-earth standoff.

Top trade officials from both nations wrapped two days of intense talks in Kuala Lumpur on Sunday with signs of a breakthrough on issues ranging from fentanyl and shipping levies to soybean exports and rare-earth restrictions.

U.S. Treasury Secretary Scott Bessent told CBS News the threat of Trump’s proposed 100% tariffs on Chinese goods is “effectively off the table.” China, in turn, is expected to resume large soybean purchases and delay sweeping export curbs on rare-earth minerals by at least a year.

“We’re progressing toward that goal very well,” added U.S. Trade Representative Jamieson Greer, referring to rare-earth negotiations on Fox News Sunday. Trump echoed the optimism, calling it a step toward a “good deal with China” during remarks at the ASEAN summit.

The framework agreement emerged after months of tit-for-tat threats, including Beijing’s October move to tighten rare-earth exports and Trump’s retaliatory tariff warnings. The new deal, if sealed during Thursday’s Trump-Xi summit, would also resolve TikTok sale disputes and port levies — both previously flashpoints in the ongoing trade war.

Chinese envoy Li Chenggang confirmed consensus had been reached on fentanyl controls, hinting at a possible rollback of U.S. tariffs tied to that issue. Li — whom Bessent earlier called “unhinged” — struck a more measured tone this time, calling the talks tough but constructive.

Markets reacted swiftly to the news. Risk-on currencies like the Australian and New Zealand dollars rallied, while safe havens like the yen and Swiss franc dipped. Bitcoin extended gains for a fourth straight day.

Perhaps most politically significant for Trump is the reopening of China’s soybean market. With rural U.S. farmers hard-hit by Beijing’s earlier retaliatory tariffs, the return of a $13 billion market offers the former president a tangible win ahead of his Thursday meeting with Xi.