The United States and China have achieved their most meaningful progress in trade negotiations in months, with both sides signalling a thaw in relations during talks held on the margins of the ASEAN summit in Malaysia.

US Treasury Secretary Scott Bessent said that the threatened 100% on Chinese imports were now “effectively off the table”, in what analysts interpreted as a major concession from Washington, The Bell reports. Chinese officials, meanwhile, confirmed that preliminary understandings had been reached on several contentious areas, including export controls, fentanyl and precursor chemical shipments, US soybean exports, and port fees.

How and if China will react to a US-Japan rare earths deal earlier on October 28 remains to be seen but Beijing has said it will suspend its restrictions on rare earth metal exports in what is a move likely to ease pressure on US technology and defence manufacturers, The Bell added. The trade truce between the two countries, originally due to lapse on November 10, will also be extended.

Together, these steps represent a significant de-escalation in economic relations between the world’s two largest economies. In an editorial, the Chinese Communist Party’s official newspaper urged global powers to “join forces to preserve hard-won agreements” ahead of this week’s APEC leaders’ summit.

Donald Trump and Xi Jinping are expected to meet in South Korea on October 30, where a broader agreement could be within reach, though officials on both sides cautioned that a comprehensive deal remains uncertain.

Global markets responded swiftly to the easing of tensions. The MSCI World Index climbed 0.3% to a record high, buoyed by optimism over a potential breakthrough. Safe-haven assets fell, with both US Treasuries and gold declining, while futures for the S&P 500 and Nasdaq 100 both advanced.

Copper, widely regarded as a barometer of global economic health, traded near historic highs on the London Metal Exchange, The Bell continued while oil prices gained on expectations of stronger Chinese demand. Commodity-linked currencies also rose.

For investors and businesses, the next stage hinges on the meeting between Trump and Xi. The agenda is expected to go beyond trade to include other politically sensitive topics – rare earths included and potentially Chinese claims over Taiwan. The future of TikTok in the United States and potential secondary sanctions on Chinese importers of Russian oil, including Rosneft and Lukoil is also expected to be covered.

It is thought that Beijing could leverage its influence over Russian crude imports to secure further concessions from Washington. If the October 30 talks in South Korea do produce tangible commitments, the easing of restrictions on critical minerals and agricultural exports could deliver a major boost to manufacturing and commodity markets alike.