Trump's team touts 'deal framework' with China. It's unclear what China will demand in return.

President Trump and his team have buoyed markets in recent days with details about what they describe as a framework of a trade deal with China, which the president will look to finalize Thursday during a high-stakes summit in South Korea with Chinese President Xi Jinping.

A question heading into the talks is perhaps what the Chinese side — who have publicly said little beyond acknowledging that progress has been made — may demand in return for their apparent openness to compromise.

Both sides have signaled that a deal could be possible around China's rare earth export controls (Treasury Secretary Scott Bessent even said he expects China will "delay that for a year") as well as promises for "substantial" purchases of US soybeans.

But those would be significant concessions from China, and there's little clarity publicly on what they want in return — but the expectation is that it's likely to be something.

"For China's part, we expect that they will drive a tough bargain," Ted Murphy, a trade lawyer with Sidley Austin, wrote in a commentary this week. "Stay tuned."

Read more: How Trump's tariffs affect your moneyPresident Donald Trump is seen at Haneda Airport in Tokyo on Monday. (AP Photo/Mark Schiefelbein)·ASSOCIATED PRESS

The White House also says that taking triple-digit tariffs off the table and finalizing the TikTok deal — which hold upsides for both the US and Chinese sides — are also likely to be included in any deal.

Trump aides have also offered hints of possible deescalation around other issues, such as the possible lowering of tariffs in return for a Chinese crackdown on fentanyl, the lessening of shipping port fees, and worries over China's purchases of Russian oil.

What will be enough for China remains to be seen, with other issues — particularly semiconductors — holding the potential to move front and center once talks commence.

China has long sought concessions on the issue of US semiconductor and other export controls. Raymond James Washington policy analyst Ed Mills was just one of many analysts this week to suggest investors keep an eye on that area.

"We also continue to expect to see a window of opportunity for negotiated reductions in US tech restrictions on leading-edge semiconductors and semi cap equipment," he wrote.

It’s an openness that the Chinese appear to share with an adviser to the Chinese government, telling Bloomberg that what essentially would be a trade of export controls may be on the table, where a lessening from China (on rare earths) is potentially matched by the US easing its own rules, which often apply to technology.

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Xi Jinping delivers an address at a meeting of the Chinese Communist party earleir this month. (Xie Huanchi/Xinhua via Getty Images)·Xinhua News Agency via Getty Images

For their part, Trump's team has offered hedged denials that semiconductor concessions are on the table.

But semiconductors are at the very least on Trump's mind during his current Asia swing. He has a meeting with Nvidia (NVDA) CEO Jensen Huang scheduled for Wednesday ahead of the Thursday sitdown with Xi.

Huang appeared in Washington on Tuesday and lavished praise on Trump during a speech, talked about the need to work with China on things like the development of AI, and declined to disclose to reporters what was on the agenda for his meeting with Trump.

A 'consensus on arrangements' and possibly more

For the moment, China has confirmed that weekend talks yielded progress but in much less glowing terms than Trump's team has offered.

Chinese state media described a "basic consensus on arrangements" and top Chinese trade negotiator, Li Chenggang, added to reporters that a "preliminary consensus" had been reached.

The contrast is stark with Trump again and again, both discussing details and setting high expectations.

The latest example came when the president was in Tokyo late Tuesday and told a dinner of business leaders in Japan that the meeting with President Xi "is going to work out very well."

There are also hints of possible tariff lowering, with officials familiar with the talks telling the Wall Street Journal that the US would be open to rolling back existing tariffs on China in return for Beijing cracking down on the export of chemicals that produce fentanyl.

It's an issue Treasury Secretary Bessent has previously hinted at, telling NBC News over the weekend, "I think we will be able to discuss them helping us get this terrible fentanyl crisis under control."

Trump has also said he'll make fentanyl a priority and that he's likely to avoid hot-button issues like Taiwan, citing the need to not "overcomplicate" things.Presidents Donald Trump and Xi Jinping met in 2019 in Osaka during Trump's first erm. (AP photo/Susan Walsh)·ASSOCIATED PRESS

The US currently has a 54% top-line tariff on China (though many goods are exempted), split between 20% duties imposed over fentanyl and 34% "reciprocal" duties.

Trump earlier this month floated an additional 100% duties on top of those existing tariffs, but his team says that the threat is already off the table after preliminary talks with China.

Meanwhile, the semiconductor issue is one that China has long pushed, seeking access to the most cutting-edge, US-designed chips.

Trump's team has tried to downplay the chances of significant moves on semiconductors, with Bessent telling CBS recently "there have been no changes in our export controls."

But it's an issue that Trump has shown a willingness to at least talk about during his second term.

Trump seemed to open the door this summer to Nvidia selling its Blackwell chip in China.

But Trump-imposed restrictions, the exclusion of the highest-end chips, and Trump's plan for the US government to get a cut of sales led to a lukewarm response, with China discouraging its companies from purchasing it.

During his stop Tuesday in Washington, Huang confirmed that his company isn't selling any chips in China currently.

Ben Werschkul is a Washington correspondent for Yahoo Finance.

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