U.S. and Chinese officials expressed optimism over the weekend after talks aimed at preventing significant tariff increases that could escalate the trade conflict between the two nations. This potential breakthrough comes just days before a crucial meeting between U.S. President Donald Trump and Chinese President Xi Jinping, marking their first in-person discussion since Trump began his second term.

Treasury Secretary Scott Bessent stated on ABC News' "This Week" that a substantial framework has been established for the two leaders. The anticipated agreement is expected to cover various issues, including the sale of the social media platform TikTok, U.S. access to essential rare earth minerals, the Chinese soybean market, and measures to combat fentanyl trafficking.

Meg Rithmire, a Harvard University business administration professor, noted, "This has become a conflict that encompasses pretty much every aspect of the U.S.-China relationship, well beyond trade. Both countries are trying to figure out what they can take in terms of pain and what they can get."

One of the key issues in the negotiations is tariffs. Trump has threatened to increase tariffs on Chinese goods by 100%, which would raise the overall tariff rate to 130%, excluding additional sector-specific duties. Such an increase could lead to higher prices for various consumer goods, including board games, electronics, and clothing. The U.S. imported approximately $438 billion worth of goods and services from China last year, making it the largest destination for Chinese exports, which account for about 15% of China's total exports.

Currently, China imposes a 10% tariff on U.S. imports, affecting the prices of U.S.-produced crops like soybeans and wheat, as well as oil and gas. If the U.S. were to raise tariffs, China might retaliate, similar to its response following the Trump administration's tariffs enacted in April.

Another significant topic is rare earth minerals. China recently announced plans to impose new restrictions on the export of these critical materials, which are essential for producing semiconductors used in various technologies, including artificial intelligence and military applications. China currently dominates the global rare earth market, controlling about 70% of mining and 90% of processing capacity. Bessent indicated that he believes China will delay these restrictions for a year while reassessing their impact.

The U.S. also plays a vital role in supplying China with key components for electronics and technology products, including advanced AI chips. In August, Trump authorized chipmakers Nvidia and Advanced Micro Devices to sell certain chips to China, although the U.S. still prohibits the export of its most advanced AI chips to limit China's technological advancements.

Soybean farmers have been particularly affected by the trade war, facing significant losses as China halted purchases of U.S. soybeans earlier this year in retaliation for U.S. tariffs. Bessent expressed hope that a potential trade agreement would positively impact soybean sales, stating, "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."