After two days of talks in Malaysia wrapped up Sunday, a Chinese official said the two sides reached a preliminary consensus on topics including export controls, fentanyl and shipping levies. 

US Treasury Secretary Scott Bessent, speaking later in an interview with CBS News, said Trump’s threat of 100% tariffs on Chinese goods “is effectively off the table” and he expected the Asian nation to make “substantial” soybean purchases as well as offer a deferral on sweeping rare earth controls. The US wouldn’t change its export controls directed at China, he added. 

“So I would expect that the threat of the 100% has gone away, as has the threat of the immediate imposition of the Chinese initiating a worldwide export control regime,” Bessent said. He separately told ABC News he believed China would delay its rare-earth restrictions “for a year while they reexamine it.”

Bessent telegraphed a wide-ranging agreement between Trump and Xi that would extend a tariff truce, resolve differences over the sale of TikTok and keep up the flow of rare earth magnets necessary for the production of advanced products from semiconductors to jet engines. The two leaders are also planning to discuss a global peace plan, he said, after Trump said publicly he hoped to enlist Xi’s help in resolving Russia’s war in Ukraine.

The encouraging signals from both sides of the negotiations were a marked contrast from recent weeks, when Beijing’s announcement of new export restrictions and Trump’s reciprocal threat of staggering new tariffs threatened to plunge the world’s two largest economies back into an all-out trade war.

Signs of an impending deal lifted sentiment in markets. Risk-sensitive currencies like the Australian and New Zealand dollars climbed against the greenback in early trading, outperforming major peers, while havens including the Swiss franc and Japanese yen edged lower. Bitcoin rose a fourth day.

Staving off China’s rare-earth restrictions is “one of the major objectives of these talks, and I think we’re progressing toward that goal very well,” US Trade Representative Jamieson Greer said on Fox News Sunday. 

Trump himself predicted a “good deal with China” as he spoke with reporters on the sidelines of the Association of Southeast Asian Nations summit in Kuala Lumpur, saying he expected additional leader-level follow-up meetings in China and the US.

“They want to make a deal, and we want to make a deal,” Trump said.

Still, markets will be closely watching the details of the ultimate agreement, after nearly a year of head-spinning changes to trade and tariff policies between the US and China. 

Chinese trade envoy Li Chenggang indicated his belief that the sides had reached consensus on fentanyl — suggesting the US might lift or reduce a 20% tariff it had imposed to pressure Beijing to halt the flow of precursor chemicals used to make the deadly drug. He said the nations would also address actions the Trump administration took to impose port service fees on Chinese vessels, which prompted Beijing to put retaliatory levies on US-owned, operated, built or flagged vessels.

Li, whom Bessent called “unhinged” earlier this month, described the talks as intense and the US position as tough, but hailed progress in the discussions. Both sides will now report the outcome back to their leaders ahead of a planned summit between Trump and Xi on Thursday.

“The current turbulences and twists and turns are ones that we do not wish to see,” Li told reporters, adding that a stable China-US trade and economic relationship is good for both countries and the rest of the world.

The reopening of soybean purchases, if realized, could provide a significant political win for Trump.

China imposed retaliatory tariffs on US farm goods in March, effectively slamming the door shut on American soybeans before the harvest even began. The Asian nation last year purchased $13 billion of US beans — more than 20% of the entire crop — for animal feed and cooking oil, and the freeze has rocked rural farmers who represent a key political base for the president.

Perhaps more important is resolving the US’s rare-earths tussle with China, which fought back against Trump’s trade offensive earlier this year by cutting off supplies of the materials. Although flows were restored in a truce that saw tariffs lowered from levels exceeding 100%, China this month broadened export curbs on the materials after the US expanded restrictions on Chinese companies.

The negotiations took place at the skyscraper Merdeka 118 as Trump met with Southeast Asian leaders at a nearby convention center, where he brokered a series of framework trade agreements seeking to diversify US trade away from China.

The Chinese delegation was led by He, China’s top economic official, and included Vice Finance Minister Liao Min. US Trade Representative Jamieson Greer was also part of the talks.

Trump’s meeting with Xi this week will be their first face-to-face sitdown since his return to the White House. The US leader has said direct talks are the best way to resolve issues including tariffs, export curbs, agricultural purchases, fentanyl trafficking and geopolitical flashpoints such as Taiwan and the war in Ukraine.

“We’ll be talking about a lot of things,” he said. “I think we have a really good chance of making a very comprehensive deal.”