The handshake that shook the world

It’s been dubbed a deal, a consensus, and even a “handshake for a framework.”

Whatever you want to call it, after two days of discussions, President Trump announced today that US and Chinese negotiators finally worked out a trade truce that both countries can stomach.

Solidifying the agreement worked out in Switzerland last month, Trump wrote in a Truth Social post that the US would set a 55% tariff rate on China, while tariffs from China on the US will be 10%.

In exchange for China speeding up mineral exports licenses on rare earth metals, a key manufacturing ingredient for tech like magnets and medical devices, the US is allowing Chinese exchange students to attend American universities.

But the details of the deal are still fuzzy, and ongoing questions will likely lead to more chaos in the markets, analysts warn. The two nations still have not formally agreed to the deal, which left investors feeling lukewarm about the news.

Regardless, the consensus is that today’s news is a boon for the two countries, which have both been under immense economic pressure from the ongoing tensions, and for certain stocks.

The biggest winners today are facets of the tech industry, which relies heavily on so-called rare earth minerals. China has a tight monopoly on the industry, given the country mines roughly 70% of the world’s rare earths, and processes 90% of them.

What does this mean?

Let’s zoom out for a second, because it’s been a roller coaster ride to get here: First, Trump unveiled his sweeping tariffs on Liberation Day via a posterboard that will live in infamy. After China threatened retaliatory tariffs, Trump upped the tariff rate on China to a staggering 145%. On May 12, the first semblances of a deal were announced, with the two nations agreeing to a 90-day pause and after a discussion in Geneva.

But then, the US announced export restrictions on specific semiconductor chips, which triggered China to threaten to restrict rare earth material exports, which then prompted Trump to ban Chinese international students.

All that to say: nobody believes today’s announcement is the end of trade tensions between the two countries. Adding to the chaos, a federal appeals court allowed Trump’s tariffs to stay in place while the Court of International Trade’s ban on tariffs works its way through the legal system.—LB