The U.S.-China game of chicken is on pause for now after President Donald Trump and Chinese Xi Jinping on Thursday moved to lower some tariffs and hit pause on some of the restrictions on rare earths and technology that had fueled the latest escalation in tensions between the two rivals.
Trump rated the meeting a 12 out of 10 in a briefing with reporters, and Chinese state media put a positive spin on the first in-person get-together between the two leaders in six years. That positive tone from the two leaders is a plus for markets. But details are sparse. China agreed to buy U.S. soybeans, for instance, but how much and over what period remains to be seen. Export controls by each country will be relaxed and loosened, but the two are yet to say precisely how. Tensions could flare again over unresolved issues.
“We need to see the details, but it’s a pause in the trade conflict, welcome news for many,” says Everett Eissenstat, partner at Squire Patton Boggs who was formerly deputy director of the National Economic Council in the first Trump administration.
“We will see if something happens in the interim to throw us off course. We seem to reach a settlement and then go off-track. This looks like a standstill, with both sides agreeing to pause some of the more impactful technology export controls but still a lot of issues unresolved.”
Trump said Nvidia Chief Executive Jensen Huang would be talking with Chinese officials, who had restricted the purchase of the company’s H20 chip even after the U.S. eased restrictions allowing its sale. In response to a question about whether the U.S. would allow the export of Nvidia’s more advanced Blackwell chips, Trump said, “we’re not talking about the Blackwell chips.”
Many investors may be comfortable with the level of detail, given the optimistic tone. “These are paltry gains after seven months of intense negotiations, but the markets don’t need much so it may be enough to continue the optimistic environment [for stocks],” says Matt Gertken, chief geopolitical strategist for BCA Research.