Good news? For the moment, anyway.
Donald Trump left his first meeting with Xi Jinping in this term with some key concessions in the trade war that has erupted between the US and China. The two met in Busan to attempt to dial down the temperature, which of late has resulted in escalating tariffs and restrictions, not to mention the sanctions on Russian oil imposed by Trump last week. The meeting didn't result in any changes on the latter -- at least thus far -- but it did roll back most of the recent trade actions between the US and China:
President Trump and Chinese leader Xi Jinping emerged from their first face-to-face meeting in six years with a temporary truce in the bruising trade fight between the two superpowers.
Their agreement lowers immediate tensions between the U.S. and China, which have been locked for months in a bitter struggle over trade and technology that has hurt both their economies.
The agreement includes a reduction in stiff U.S. tariffs on Chinese goods in exchange for a pledge by China to crack down on the trade in the chemicals used to produce fentanyl.
China also promised to ease the exports of rare earths—minerals that Western manufacturers rely on to make a range of goods. And Beijing promised to buy “tremendous amounts” of American soybeans, said Trump.
Interestingly, the markets barely responded to the news this morning. The Dow Jones ticked up 0.44%, but both the NASDAQ and S&P500 ticked downward slightly at the same time. CNBC suggests that both have less to do with the trade situation and relate more to an investor exodus from the tech sector:
Megacap tech giants Alphabet, Meta and Microsoft each reported quarterly results after market close Wednesday. While Alphabet shares popped about 5% on the back of strong results, shares of Meta and Microsoft tumbled about 11% and 2%, respectively. Investors grew worried about the increased spending outlooks for both Meta and Microsoft.
The drop in Meta and Microsoft, as well as artificial intelligence chip giant Nvidia, marked a rotation out of technology stocks in the session. While those were lower, bank stocks such as JPMorgan and Bank of America saw gains, as did health-care stocks on the heels of Elly Lilly’s stronger-than-expected quarterly results and guidance raise. Shares of Eli Lilly were last up 2%.
The reason for a cautious market response is that the bigger trade issues with China remain unaddressed:
To be sure, other areas such as the export of Nvidia chips and the TikTok divestiture remain unresolved. While China’s Ministry of Commerce said that the country is willing to work with the U.S. to “resolve issues related to TikTok,” the ministry didn’t provide any further details on the matter.
Trump addressed the Nvidia issue on Air Force One this morning, promising that they were still working that out. He also suggested that a full and comprehensive trade package may come soon, and that the biggest win for the US was renewed access to rare-earth exports from Beijing:
President Trump on trade truce with China. pic.twitter.com/M8esuGlyfX
— Open Source Intel (@Osint613) October 30, 2025
The rare-earth agreement is time-limited, however, and will require annual negotiations:
Trump told reporters aboard Air Force One that the rare earths agreement is a one year deal that will be “very routinely extended as time goes by.” The president said he plans to visit China in April and Xi will come to the U.S., either Palm Peach, Florida or Washington D.C., at a later date.
“We have a deal,” Trump said. “Now, every year we’ll renegotiate the deal, but I think the deal will go on for a long time, long beyond the year. But all of the rare earth has been settled, and that’s for the world.”
China also agreed to increase its purchases of American agricultural products, especially soybeans and sorghum. The two countries will also lift docking fees reciprocally to further lower the price of trade, although even with the tariff reductions announced this morning, Trump estimated that China's exports will still carry an effective 47% tariff rate.
This is a step toward a trade agreement, not a firm basis to end a trade war. 'Truce' is probably a good analogy, especially given the mercurial moves by both countries on previous concessions. This is more like a trust-building exercise that precedes more stable truces and eventually peace agreements. That's why markets are absorbing this without much movement, because they are still pricing in the potential for later disruptions. It's a good start, however, and enough of a win for Trump to justify the summit with Xi while still keeping pressure on China for compliance, and still keeping all options open for Russia.
Editor’s Note: Thanks to President Trump and his administration’s bold leadership, we are respected on the world stage, and our enemies are being put on notice.
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