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U.S. and Chinese officials voiced optimism over the weekend following talks aimed at averting steep tariffs set to ratchet up the trade war between the world’s two largest economies. The potential breakthrough arrives days before a high-stakes meeting between U.S. President Donald Trump and Chinese President Xi Jinping, the first in-person gathering of the two leaders since Trump took office for his second term. "I think we've reached a substantial framework for the two leaders,” Treasury Secretary Scott Bessent told ABC News' "This Week" co-anchor Martha Raddatz on Sunday. The possible agreement is expected to address a wide range of issues, including the sale of the social media platform TikTok, U.S. access to critical rare earth minerals and the Chinese soybean market, and a crackdown on fentanyl. “This has become a conflict that encompasses pretty much every aspect of the U.S.-China relationship, well beyond trade,” Meg Rithmire, a professor of business administration at Harvard University, told ABC News. “Both countries are trying to figure out what they can take in terms of pain and what they can get.” Here’s what to know about the key issues at stake in the negotiations and what they could mean for you. Tariffs and toy prices Trump has threatened to increase tariffs on China by a staggering 100% on Saturday, which would bring overall China levies to 130%, excluding additional sector-specific duties. The move could hike prices for board games, consumer electronics, clothing and a host of other goods imported from China. A tariff hike could potentially damage the Chinese economy. The U.S. imported about $438 billion worth of goods and services from China last year, making it the largest destination for China’s exports. In all, that figure accounts for about 15% of China’s exports, according to the Office of the U.S. Trade Representative. China currently imposes 10% tariffs on U.S. imports, increasing costs for the sale of U.S.-produced crops such as soybeans and wheat, as well as oil and gas. If Trump were to ratchet up U.S. tariffs, China could respond with retaliatory tariffs, as it did in the aftermath of what the Trump administration dubbed “liberation day” in April, when a fresh round of tariffs against global trading partners were enacted. Rare earth minerals and AI chips Earlier this month, China vowed to impose sweeping new restrictions on the export of rare earth minerals, key materials in the production of semiconductors used for everything from artificial intelligence to military weapons to home appliances. China dominates global production of rare earths, accounting for roughly 70% of rare earth mining and about 90% of processing capacity. Referring to Chinese plans to impose strict control of rare earths, Bessent said Sunday that he believes "they are going to delay that for a year while they reexamine it." China, meanwhile, relies on the U.S. for some important components of its electronics, auto and technology products, including advanced AI chips. In August, Trump granted permission to chipmakers Nvidia and Advanced Micro Devices for the sale of some chips to China. Even so, the U.S. prohibits the export of its most advanced AI chips in an effort to hamstring China in the race to control the fast-growing AI market. Soybean farmers Trump has drawn criticism from some soybean farmers who have suffered major losses amid the U.S.-China trade war. China purchased more than half of all U.S.-grown soybeans in each of the past two years. But China stopped buying soybeans from the U.S. earlier this year as a retaliatory measure taken in response to Trump’s tariffs. On Sunday, Bessent said he expects a potential U.S.-China trade agreement to address soybean sales. "I believe, when the announcement of the deal with China is made public, that our soybean farmers will feel very good about what's going on, both for this season and the coming seasons, for several years," Bessent told ABC News’ “This Week.” Last month, Trump announced an agreement that would pave the way for social media giant TikTok to come under the control of a group of U.S. investors. But China has not provided public approval of the deal, leaving the fate of a potential U.S.-based TikTok uncertain. The standoff move comes nine months after a ban on the China-based app was set to take effect at the outset of this year. Instead, Trump delayed the ban multiple times and appears poised to secure the popular platform for domestic ownership. Scrutiny has centered on the fate of TikTok's algorithm, a proprietary formula that fuels the attention-grabbing social media platform. Last month, Vice President J.D. Vanc said the agreement would bring the algorithm "under the control of American investors," but details regarding that claim remain limited. “The TikTok issue seems really important to the U.S. but not all that important to China,” Rithmire said. “China can hold up its approval of the TikTok algorithm. It’s holding up that particular part of the deal.” Trump has repeatedly criticized China for originating much of the world’s supply of fentanyl, a drug that accounts for nearly 7 of every 10 U.S. overdose deaths, according to the Centers for Disease Control and Prevention. A 2024 report by the U.S. House Select Committee on the CCP stated that "companies in China produce nearly all of illicit fentanyl precursors, the key ingredients that drive the global illicit fentanyl trade." Bessent said the U.S. and China in recent days reached a preliminary accord to address China-made fentanyl bound for the U.S. “We agreed that the Chinese would begin to help us with the precursor chemicals for this terrible fentanyl epidemic that's ravaging our country,” Bessent said.
