A phone call just rocked the global trade narrative again. Trump dialed up Xi for a 90-minute chat, and the outcome? The U.S. and China are officially back at the negotiating table.

This isn’t just a diplomatic formality. For traders, this shift is pure volatility fuel. One tweet, one statement, and the charts could light up. Let’s break down what matters, no fluff, just the signals you need to watch.

What Traders Need to Know:

1. U.S.–China Trade Talks Are Back On

President Trump and President Xi agreed to resume negotiations, with Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, and U.S. Trade Rep Jamieson Greer representing the U.S. side. Expect headlines, and market swings, to follow every word.

2. Rare Earths Back in the Spotlight

Rare earth exports were a hot topic. The U.S. claims China’s dragging its feet on promises to boost exports of these crucial materials, while Trump doubled down, saying there should be "no more questions" about their complexity. Looks like, tensions remain under the surface.

3. Tariffs Still Doing Damage

Despite talks, the trade war isn’t cooling off just yet. Trump’s blanket tariffs on Chinese imports are still at 145%, while Beijing’s retaliatory levies are at 125%. These levels scream trade embargo, and the longer they stick around, the louder the global ripple effects get.

4. Semiconductor Drama Still Simmering

The Trump administration added new chip export restrictions, alongside an industry warning not to use Chinese semiconductors. China’s furious. And that tech war? It’s still hot, with real implications for USD, CNH, and even Aussie and chip stocks.

5. Risk Assets React, But No Full Reversal Yet

Markets whipsawed on news of the call, but no one’s betting on a full detente just yet. The USD and equities caught a short-term bid, but traders know the pattern: talks start, optimism spikes, then another tweet hits and it’s back to square one.

Here’s the takeaway:

Don’t get complacent. The call is a green light for diplomacy, but the tariffs, tech tensions, and rare earth standstill mean this is still a risk-on, risk-off environment.

For us forex traders, watch USD/CNH, AUD/USD, and risk proxies. Equities are back to being headline-driven. And for macro traders, the real question is this: is this renewed diplomacy or just another chapter in the Trump tariff saga?

Stay cautious as always and keep your stops tight. And as always, trade the reaction, not the assumption.

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