A recent phone call between the leaders of the US and China has positively affected trade relations. They discussed details of a recent trade deal, focusing mainly on Rare Earth products. The conversation lasted about an hour and a half and did not touch on Ukraine or Iran. After this call, trade teams from both nations will meet soon, with key US government officials taking part.

Invitation For Diplomatic Visits

President Xi of China invited the US President and First Lady for a visit. The US President accepted the invitation. The dates and locations for these upcoming meetings have yet to be revealed. This development encourages ongoing dialogue, although some in the market expected more significant relief from tariffs. The recent talks between Beijing and Washington improved feelings about trade-related matters. While the call mainly focused on Rare Earth exports, there were no new announcements regarding tariffs, lifting of duties, or specific timelines. This suggests that existing policies will remain more or less unchanged. The tone of the conversation was friendly, fostering goodwill between both parties. The absence of discussions on Ukraine and Iran reduces geopolitical risks and keeps the focus on economic cooperation. Although some may find this outcome underwhelming, a low-key resolution can promote stability in the short term.

Focus On Future Tariff Discussions

The upcoming meeting of trade representatives will be led by senior officials from the American administration, indicating a continuation of discussions. These talks are expected to focus on the technical details of existing agreements, including quantities, supply priorities, and non-tariff barriers. Rare Earth materials are crucial for many defense and tech industries, so better access or firm commitments could change pricing in industrial metal markets. Xi’s invitation to the US leaders adds a friendly touch to their talks. It serves as public diplomacy that builds confidence without forcing immediate policy changes. For now, it’s wise to set aside expectations for an immediate rollback of trade restrictions. Given the low-key nature of this announcement, we can anticipate that volatility premiums in commodities and emerging market currencies will remain stable. There is nothing in this dialogue that should impact existing derivative positions tied to trade in the short term, but we may see some adjustments in capital if supply chains shift due to a more positive atmosphere. If tariffs do get reduced during future discussions, expect sectors like electric vehicle manufacturing, semiconductors, and wind energy to feel the impact first. These industries rely heavily on consistent access to processed Rare Earths. Until such changes happen, those selling volatility might find opportunities in a market that is currently overreacting. Some traders had anticipated immediate concessions, especially since previous negotiations often led to announcements timed with financial calendars. That expectation has now been tempered, which may lead some to shift from directional positions to hedged strategies until there’s more concrete information. Overall, both governments are managing the narrative carefully. The discussions are controlled and predictable, which suits those of us who prefer stability in rate-sensitive commodity baskets or credit-default instruments impacted by US-China tensions. Create your live VT Markets account and start trading now.

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