U.S. – China: A Combat Draw for the Coming Year

SP500

Key zone: 6,850 - 6,930

Buy: 6,950 (on strong positive fundamentals); target 7,050-7,100; StopLoss 6,900

Sell: 6,850(on a confident breakout of the 6,900 level); target 6,700; StopLoss 6,900

As a result of what Trump called a “fantastic” 90-minute meeting between the leaders of the United States and China, both sides reached a mutually beneficial “understanding” on several key issues: supplies of rare earth materials, the fight against fentanyl transit, and China’s purchase of U.S. agricultural products. The duration of the agreements is one year.

Recall: this summit took place six months after Trump imposed 145% tariffs on Chinese goods, and Beijing responded with 125% tariffs on American products. These measures effectively turned the trade confrontation into an embargo.

Xi Jinping emphasized that China’s development goes hand in hand with America’s ambition to “make the U.S. great again.” The Chinese leader noted that disagreements between the two countries are inevitable but represent a “normal state” for the world’s two leading economies.

Trump announced that China agreed to:

• work more actively to stop the flow of fentanyl into the U.S.;
• ensure unrestricted supply of rare earth metals, key minerals, and magnets;
• suspend export controls on rare earth materials for one year;
• begin the process of purchasing American energy resources.

China assured the U.S. that it would not create obstacles to the supply of materials critical to American industry.

Energy teams from both countries are expected to hold negotiations on the possibility of a large-scale deal for oil and gas deliveries from Alaska.

Trump also stated that he was pleased with Xi Jinping’s decision to allow China to buy soybeans, sorghum, and other agricultural products from the U.S. on a large scale. Regarding the sale of Nvidia Blackwell chips, there is no specific information yet.

Both leaders noted that the issue of Taiwan was not raised during the meeting.

In exchange for Beijing’s concessions, Trump promised to reduce tariffs on Chinese goods — those imposed over the fentanyl issue — by 10%, down to 47%, with the possibility of further cuts. He also confirmed his intention to visit China in April 2026, after which Xi Jinping plans a reciprocal visit to the U.S.

Both sides plan to review the agreement’s details annually, and analysts are confident it will last longer than one year. For now, the trade war has entered a pause during which both sides can strengthen their economic positions. But no matter how much Trump fusses, the outcome of the meeting is superficial and does not touch the key pain points.

There is a deal, but no joy on the markets.

Markets reacted calmly: U.S. stock futures and most Asian stock markets remained unchanged or slightly declined in price. In fact, both sides agreed only on intentions, while a full-fledged trade agreement and its implementation mechanism are still under development. Moreover, unlike Trump, the Chinese side is behaving calmly and shows no enthusiasm following the talks.

So we act wisely and avoid unnecessary risks.

Profits to y’all!