Description: The second day of the trade negotiations between the US and China finished on a high, as US President Donald Trump announced on his social media platform Truth Social, that both sides have agreed on reaching a trade deal. He announced that 35% tariffs would remain imposed on China as the Chinese would replicate the move holding 10% of tariffs on US imports. The rare earth mineral exports from China were also agreed upon as China would gain access to US products as per the discussed terms in the negotiations. Details around the fine touches of the framework remained scarce as it wasn’t clarified what would China gain in return for enabling the US to have access to its rare earth mineral exports. Investors and market forecasters remained skeptical awaiting more detailed information and an official confirmation from the Chinese side that the framework has been accepted.
Impact: The trade framework certainly represents a landmark foundation for a broader trade deal between the US and China going forward. Even though the US has publicly accepted the results from the recent London exchanges, China remained strangely quiet which fueled further trade tensions and uncertainty. The framework pushes both countries closer to reaching a potential trade deal and showcased the enlarged economic codependence and impact the two largest global economies have on the global markets. Through the disruptions caused by the tariffs, China and the US have pinpointed each other’s economic weaknesses and emphasized the importance of critical minerals in today’s global economy. China reserves the upper hand as it’s expected to positively respond to the US approval, with trade negotiations expanding towards a larger sphere of diplomatic engagement where other animosities and differences are expected to be tackled.