Trump and Xi: The Rare Earths Truce

A Deal Under High Tension

The two most powerful leaders on the planet have reached common ground: Beijing is temporarily lifting its export limits on rare earths, committing to purchase « immense quantities » of American soybeans, and slowing the production of fentanyl precursors. In return, Washington is cutting tariffs on Chinese goods by 10% and easing restrictions on the export of electronic chips.

For Clément Inbona, a manager at La Financière de l’Échiquier (LFDE), this sequence marks a turning point: « After months of escalation, the two countries acknowledge their interdependence. » China demonstrates that it can turn its monopoly on critical materials into a diplomatic weapon; the United States reveals its vulnerability to this strategic dependence.

By resuming the commercial offensive in April 2025, Donald Trump aimed to demonstrate his firmness; what emerges is a pragmatic agreement, driven as much by the markets as by the presidential campaign. Xi Jinping portrays himself as a rational and responsible player, ready to stabilize the global economy... in his own way.

From Economic Warfare to the Geopolitics of Resources

The rare earth episode highlights a reshaping of multilateralism. By leveraging restrictions on materials essential for batteries, semiconductors, and weapon systems, China sets the pace: Western technological dependence becomes a tool of power.

"The extraterritoriality of the dollar has found its counterpart: that of resources, » notes Clément Inbona. Beijing extends its influence beyond its borders, just as Washington has long done through its currency and legal system. This unprecedented symmetry reshuffles the deck of a global order where economic sovereignty takes precedence over cooperation.

For financial markets, this truce is significant mainly for what it prevents: a new inflationary surge linked to supply chains. The easing of tariffs provides relief to Asian exporters, while the S&P 500 and CAC 40 regain momentum. However, no one is fooled: the conflict remains latent. Any political misstep could reignite tensions on the eve of the US elections.

From Economic Warfare to Resource Geopolitics

The rare earth episode reveals a reconfiguration of multilateralism. By exerting pressure on materials essential for batteries, semiconductors, and weapon systems, China sets the pace: Western technological dependence becomes a lever of power.

"The extraterritoriality of the dollar has found its counterpart: that of resources, » notes Clément Inbona. Beijing extends its influence beyond its borders, much like Washington has long done through its currency and legal system. This unprecedented symmetry reshuffles the cards of a world order where economic sovereignty takes precedence over cooperation.

For financial markets, this truce is valuable mainly for what it prevents: another inflationary surge linked to supply chains. The easing of tariffs gives Asian exporters some breathing room, while the S&P 500 and the CAC 40 regain momentum. But no one is fooled: the conflict remains latent. Any political misstep could reignite tensions on the eve of the US elections.