Speaking after the trade talks, US President Donald Trump told reporters at the White House on Monday: “China will also suspend and remove all of its non-monetary barriers. They’ve agreed to do that,” he said. “It’s going to take a while to paper it. You know, that’s not the easiest thing to paper,” he added.
In early April, China imposed rare earth export restrictions on the US as a major non-tariff countermeasure in response to Trump’s reciprocal tariffs. The export controls affected seven critical minerals, on which the US heavily relies. These minerals are essential components in the manufacture of electric vehicles and electronic devices.
Trump’s remarks suggest that whether China will suspend or remove its export controls on these key minerals will be a central term in the negotiations. The removal or suspension of the controls could further bolster optimism surrounding a de-escalation of trade tensions.
On Monday, the world’s two largest economies reached an agreement to pause tariffs for 90 days. The US will reduce tariffs on China to 30% from 145%, while China will lower import levies on US goods to 10% from 125%.
Stock market rally loses steam
The broad-based market rally showed signs of retreat during Tuesday’s Asian session, indicating investor caution over the progress of US-China negotiations. Although both sides agreed to establish a mechanism for further discussions following the weekend’s talks, no specific dates have yet been set for future meetings.
US stock futures declined, pointing to a lower open. As of 4:50 am CEST, the Dow Jones Industrial Average fell 0.25%, the S&P 500 dropped 0.38%, and the Nasdaq Composite slid 0.47%. By contrast, European major index futures were more resilient, with the Euro Stoxx 600 slipping 0.17%, the DAX flat, and the FTSE 100 falling 0.23%.
Markets are awaiting further details of the agreement, particularly regarding China’s non-tariff countermeasures. Investors are also concerned about whether a comprehensive trade deal can be secured between the two nations after the 90-day pause.
“The critical issue from here is solidifying trade deals and ensuring the reduced tariffs don’t lapse after 90 days,” wrote Kyle Rodda, a senior market analyst at Capital.com, Australia, in an email. He added that markets would also look to see whether the US can achieve trade deals with other partners. “The markets will also want to see the US maintain this momentum and nut out deals with its other trading partners. Should that happen, the recovery in equities and the dollar ought to continue,” he said.