Bessent and China’s He Lifeng to Meet in Malaysia in Bid to Avert Tariff Escalation

US Treasury Secretary Scott Bessent will meet Chinese Vice Premier He Lifeng in Malaysia next week in a fresh attempt to defuse tensions ahead of a looming escalation in tariffs, as both sides seek to prevent another trade war spiral.

Bessent confirmed the meeting after a phone call with He on Friday evening, saying the two had engaged in “frank and detailed discussions” on bilateral trade. China’s state news agency Xinhua described the talks as “candid, in-depth, and constructive”, with both sides agreeing to convene a new round of in-person negotiations “as soon as possible.”

The upcoming talks will take place just weeks before the expiration of a tariff truce that had rolled back duties from triple-digit levels on both countries’ goods. The truce is set to expire on Nov 10, raising the stakes for next week’s dialogue.

Malaysia: A Neutral Ground Under Pressure

The decision to hold the meeting in Malaysia — a key Southeast Asian exporter trading heavily with both China and the US — carries symbolic weight. Malaysia’s goods currently face a 19% US duty, with the Trump administration also threatening 100% tariffs on semiconductors and related electronics under a national security review.

Hosting the talks positions Malaysia as a potential bridge in the intensifying US-China trade conflict, even as it contends with the economic fallout from being caught in the middle.

Trump’s Hard Line and Market Reaction

Earlier on Friday, President Donald Trump told Fox Business that his proposed 100% tariffs on Chinese goods were “not sustainable” but necessary to counter Beijing’s export restrictions on rare-earth minerals — key inputs for electric vehicles and advanced electronics.

“They forced me to do that,” Trump said, while emphasizing that he remains open to dialogue with Beijing. He confirmed plans to meet Chinese President Xi Jinping in South Korea in two weeks, signaling a tentative softening in tone.

Markets responded positively to the announcement. After a volatile week dominated by tariff and banking worries, US stock indexes recovered in afternoon trading, buoyed by hopes of renewed diplomacy.

WTO and Global Trade Concerns

The World Trade Organization (WTO) warned that continued escalation between Washington and Beijing could shrink global economic output by up to 7% over time. WTO Director-General Ngozi Okonjo-Iweala said she had been in contact with both sides, urging restraint and renewed dialogue to stabilize trade flows.

Meanwhile, rhetoric between the two powers remains heated.

Bessent, in remarks to the IMF’s steering committee, accused China of “state-driven distortions” that have led to industrial overcapacity and flooding global markets with cheap goods. Beijing fired back, accusing Washington of “undermining the rules-based multilateral system” and pledging to expand its use of WTO dispute mechanisms.

Outlook: Stakes Rising Before November Deadline

With tariffs on the brink of doubling and rare-earth exports tightening, the Malaysia meeting may be one of the last opportunities to cool tensions before the Nov 10 truce expires.

While both sides have signaled willingness to talk, the outcome will hinge on whether Washington and Beijing can find common ground on trade fairness and industrial policy — or whether the global economy faces another round of tariff-driven turbulence.