A framework agreement between the United States and China reached Sunday in Malaysia could reshape global market dynamics when trading resumes Monday, potentially ending months of escalating tensions between the world’s two largest economies.
US Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer concluded two days of negotiations with Chinese Vice Premier He Lifeng and trade negotiator Li Chenggang, with both sides signaling they’d reached preliminary consensus on key issues. The development comes ahead of a Thursday meeting between President Donald Trump and Chinese leader Xi Jinping in South Korea.
Bessent told multiple news outlets the threatened 100 percent tariffs on Chinese goods were effectively off the table, marking a dramatic shift from the confrontational posture that characterized recent weeks. The framework addresses several flashpoints that had threatened to derail economic cooperation between Washington and Beijing.
Nigel Green, CEO of deVere Group, says the agreement represents what markets have been waiting for. This is typically the kind of catalyst that moves everything at once, he notes, adding that the tone of risk has changed dramatically.
The proposed framework includes arrangements for China to defer its expanded export controls on rare earth minerals and magnets, which were scheduled to take effect December 1. Those controls had raised concerns about supply chain disruptions across industries from smartphones to electric vehicles and defense technology.
Agricultural trade also features prominently, with Bessent indicating China agreed to make substantial purchases of US soybeans. American farmers, who’ve faced near-zero Chinese purchases during one of the largest harvests in decades, stand to benefit if the framework translates into concrete commitments.
The negotiators also finalized details on TikTok’s US operations, resolving a dispute that’s lingered since the platform faced requirements to sell its American assets. Bessent suggested the specifics would be ready for Trump and Xi to formalize during their meeting.
Green observes this framework represents an inflection point for the global economy. For months, supply chains have been held hostage to uncertainty, he explains. Now manufacturers and markets have a path forward, with ripple effects expected from semiconductors and shipping to commodities and emerging market debt.
Asian stock markets surged Monday morning on hopes of easing tensions, with analysts anticipating risk-sensitive currencies like the Australian dollar and South Korean won could strengthen. Copper and oil prices may also gain on renewed confidence in trade volumes.
The reopening of dialogue between economic superpowers could energize equity markets globally, Green continues. Investors are likely to rotate back into cyclicals including industrials, materials, logistics and tech hardware. The sentiment swing could also lift global growth forecasts for the first time this quarter.
Beyond immediate market impacts, the framework carries broader monetary implications. If goods start moving more freely, inflation expectations should soften, Green explains, giving central banks more flexibility to sustain growth. Markets could begin pricing in earlier rate stability rather than continued tightening.
Chinese negotiator Li Chenggang acknowledged the intensity of discussions, noting that both sides would proceed through internal approval processes before finalizing terms. The US position has been tough while China defended its interests firmly, Li said, but both engaged in constructive exchanges exploring solutions.
Still, Green cautions against mistaking tactical cooperation for strategic alignment. This truce is tactical, he says. It’s recognition that escalation was damaging both economies, but the competition including technological, geopolitical and financial dimensions continues. The new global arms race isn’t suspended, it’s shifting into a different arena.
The framework’s impact could extend to digital assets as well. Improved trade flows typically lift industrial metals and emerging market equities, Green notes, while a softer dollar may support alternative stores of value such as gold and Bitcoin. Capital moves on expectation, he explains. If markets sense the worst is behind us, renewed flows into risk assets become likely.
Trump himself expressed optimism on the sidelines of the ASEAN summit, saying he expected to meet Xi both in China and at either Washington or his Mar-a-Lago club in Florida. Beyond trade, discussions are expected to cover Taiwan, the detention of Hong Kong media tycoon Jimmy Lai, and China’s potential role in addressing Russia’s war in Ukraine.
Green concludes that investors will be watching Monday’s open as the first real test of sentiment. The direction of travel appears unmistakable, he says. The cycle of tariff escalation seems to be ending, and the world’s two largest economies are talking growth instead of retaliation. That’s enough to reawaken animal spirits globally.
However, the durability of any agreement remains uncertain. The trade relationship, worth approximately $660 billion annually, has weathered numerous disruptions over recent years. Markets will scrutinize whether the preliminary consensus translates into lasting cooperation or merely provides temporary relief before the next round of tensions.
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