The United States and China have agreed to extend the Busan economic agreement, which was due to expire in November, until January 10, 2027, delaying the risk of renewed tariff increases and export restrictions while both sides continue negotiations on a broader trade deal.

US Treasury Secretary Scott Bessent announced that Washington and Beijing had agreed to extend the agreement reached last year in Busan, South Korea, for an additional two months beyond its scheduled expiration date of November 10.

Speaking to Fox News, Bessent said the extension would provide more time for the two countries to work toward a wider economic agreement instead of focusing only on limited and separate deals.

He said Washington and Beijing were evaluating the possibility of reaching a more comprehensive agreement covering broader trade and economic issues.

Extension ahead of Trump-Xi talks

The extension comes ahead of Chinese President Xi Jinping's visit to Washington and a planned meeting with US President Donald Trump on September 24.

Xi arrived in Washington on September 23, while Trump welcomed the Chinese leader at Joint Base Andrews in Maryland.

The two leaders are expected to discuss trade relations, Taiwan, Iran, artificial intelligence, technology competition and other issues affecting bilateral ties.

Trade tensions remain unresolved

The Busan agreement was reached after trade tensions between the world's two largest economies escalated, with both sides imposing higher tariffs on each other's goods.

The agreement helped ease tensions by delaying additional tariff increases and some export restrictions. Under the arrangement, China agreed to ease restrictions on rare earth elements and critical minerals and increase purchases of US agricultural products.

However, Washington says Beijing has not fully fulfilled all of its commitments under the agreement.

Bessent said China had met its target of purchasing 25 million tonnes of US soybeans but remained behind on a commitment to buy an additional $17 billion worth of other US agricultural products.

The US side has also said Chinese shipments of rare earth elements remain below the levels agreed under the arrangement.

The extension postpones the possibility of higher tariffs and some export restrictions returning on November 10, but it does not mean that all trade disputes between Washington and Beijing have been resolved.

The two sides are expected to use the additional time to seek a broader agreement aimed at stabilising economic relations between the world's two largest economies. (ILKHA)