The United States and China have reached a preliminary “framework” agreement on trade following two days of negotiations in London, aimed at reducing escalating tensions between the world’s two largest economies. Though the exact details of the agreement, announced on Tuesday, remain unclear, the development marks a significant breakthrough. It comes just a month after both nations declared a 90-day pause on most of their existing tariffs during earlier discussions in Geneva.

US Commerce Secretary Howard Lutnick emphasized that both sides had worked through the critical issues dividing them and were committed to implementing what is being called the “Geneva consensus.” Lutnick stated that the framework agreement would be advanced for implementation, contingent on formal approval from US President Donald Trump and Chinese President Xi Jinping. The two leaders had reportedly held a 90-minute phone call discussing trade just a week before the London talks concluded.

One of the key areas of contention—China’s reduced exports of rare earth minerals—was addressed. Lutnick hinted that US-imposed measures in response to this issue might be eased if the supply of these crucial materials, essential for high-tech manufacturing, improves. Meanwhile, Chinese Vice Commerce Minister Li Chenggang described the London discussions as “professional, rational, in-depth, and candid.” He noted that both delegations would report back to their national leadership about the talks and the tentative framework agreed upon. Li expressed optimism that the outcome would contribute to building trust between the two nations.

The news had an immediate positive impact on financial markets. Asian stock indices responded with gains amid hopes of a de-escalation in trade hostilities. Japan’s Nikkei 225 rose by nearly 0.5% as of early Wednesday trading, while Hong Kong’s Hang Seng Index and China’s CSI 300 increased by approximately 1% and 0.8% respectively.

However, broader economic indicators still reflect uncertainty. The World Bank revised its global growth forecast for the year, lowering it from 2.7% to 2.3%, citing persistent concerns around global trade and geopolitical instability.

Trade experts remain cautiously optimistic. Deborah Elms, head of trade policy at the Hinrich Foundation in Singapore, told Al Jazeera that meeting a 90-day deadline for such complex negotiations was always going to be difficult. She acknowledged that, while the London talks signaled a willingness to cooperate and avoid further escalation, the road ahead would be challenging. Elms cautioned that despite positive rhetoric, meaningful resolution of the trade issues would require continued effort and compromise from both parties.

In summary, the framework agreement between the US and China is a hopeful step towards reducing trade tensions and fostering economic cooperation. It signals a renewed commitment to dialogue and mutual problem-solving, but the absence of concrete details and the complexity of underlying issues suggest that implementation will be neither quick nor easy. The outcome now hinges on high-level political approval and the ability of both sides to sustain momentum toward a more stable trade relationship.