President Donald Trump said on Monday the U.S. and China have reached a framework for a new trade agreement just days before his meeting with Chinese President Xi Jinping — even as tensions with Canada flared over a new 10% tariff on imports.
Meanwhile, Mexico secured another extension for “a few more weeks” on a looming tariff deadline, Mexican President Claudia Sheinbaum said on Monday.
Trade breakthrough with China
The U.S. and China have agreed to the framework of a trade deal that could be finalized when Trump and Xi meet later this week in South Korea, according to U.S. Treasury Secretary Scott Bessent.
The plan includes a final agreement over TikTok’s U.S. operations, a deferral of China’s tightened rare earth export controls, and the resumption of large-scale soybean purchases from the U.S.
Bessent told CBS’ Face the Nation with Margaret Brennan on Sunday that the 100% tariff Trump had threatened on Chinese imports would likely be avoided, saying the two countries had reached “a substantial framework” that would “avert tariffs.”
The U.S. and China have also agreed to finalize additional details in the coming weeks. Beijing confirmed that talks produced “constructive” progress and a “basic consensus” on trade arrangements, Bessent said.
The discussions come amid months of escalating trade measures, including Chinese restrictions on rare earth exports vital to U.S. electronics manufacturing and Trump’s renewed push to expand American access to Asian mineral supply chains through agreements with Malaysia and Thailand.
Trump raises tariffs on Canada
Even as Washington and Beijing moved closer to easing trade tensions, Trump reignited friction with America’s northern neighbor. On Saturday, he announced a 10% tariff hike on Canadian imports, a move reportedly triggered by an Ontario advertising campaign that featured former President Ronald Reagan denouncing tariffs.
The new tariffs represent a sharp break from the cooperative framework under the U.S.-Mexico-Canada Agreement (USMCA).
The escalation coincides with Canada’s economy entering contraction for the first time in more than a year. Statistics Canada reported GDP fell 0.4% in Q2 2025, with exports dropping 7.5% after U.S. tariffs on steel, aluminum and autos took effect, according to BNN Bloomberg.
Mexico avoids confrontation — for now
Sheinbaum said on Monday she spoke with Trump over the week and the two leaders agreed to delay his planned 30% tariff on Mexican imports, citing “very good progress” in ongoing negotiations.
“I was interested in making sure that Nov. 1 didn’t arrive without us having communicated and that we were in agreement that our teams were still working,” Sheinbaum said during her daily morning news conference on Monday.
The U.S. agreed in July to pause for 90 days an increase in tariffs on heavy-duty vehicles made in Mexico as the two countries continued talks aimed at reaching a new trade deal. That pause was set to end this week.
The U.S. currently has tariffs of 25% to 30% for automotive sector goods and 50% for steel and aluminum from Mexico.
