US Open to Extending China Trade Truce or Pursuing Larger Deal, Treasury Secretary Says

The United States is open to extending its temporary trade truce with China or pursuing a more comprehensive trade agreement, U.S. Treasury Secretary Scott Bessent said Wednesday. The remarks came after a meeting with Chinese Vice Premier He Lifeng, held to resolve outstanding issues ahead of a summit between President Donald Trump and President Xi Jinping on Thursday.

Two Paths for Trade Relations

Bessent told reporters that two options are on the table as the November 10 expiration of the current trade truce approaches. He said the U.S. could either continue the existing "Busan arrangement" or explore a larger deal, an idea he attributed to Chinese officials from a meeting on Sunday.

"We’re open to the idea of just continuing the Busan arrangement or examining the bigger deal," Bessent stated, according to Reuters. "We’re fine with both, and we’re going to do what’s best for the American people."

Sticking Points and Broader Context

The current truce, established last year, significantly lowered bilateral tariffs that had previously escalated and included an agreement for China to restore the flow of critical minerals. However, compliance remains a key point of contention for Washington.

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U.S. officials told reporters last week that China's delivery of rare earth minerals "has not been up to par." Separately, U.S. Trade Representative Jamieson Greer told Bloomberg TV on Monday that while he expects talks on an extension to continue, the U.S. must maintain pressure on China to ensure it meets its commitments.

Other topics discussed by the two sides included establishing a process to identify potential tariff cuts on non-strategic goods, Chinese purchases of Boeing aircraft, and cooperation on artificial intelligence safety.

Outlook for Investors

The signal of flexibility from the Treasury offers a degree of optimism for markets, suggesting a mutual desire to avoid a return to the escalating tariff war seen last year. An extension of the truce would likely be viewed as a positive development, providing continued stability for global supply chains and corporate earnings.

Investors will be closely watching the outcome of the Trump-Xi meeting for a definitive direction on trade policy. While the potential for a larger, more permanent deal exists, the immediate market focus remains on preventing the expiration of the current arrangement and the re-imposition of steep tariffs.