"Sino-U.S. Summit" makes a significant breakthrough! The U.S. has reduced dialogue tariffs from 57% to 47%, and all restrictions on rare earths have been lifted.

U.S. President Donald Trump said after the highly anticipated meeting with Chinese leaders in South Korea on Thursday, “The meeting with the Chinese leaders was fantastic. If I were to rate it from 1 to 10, I would give it a 12.” Many significant decisions were made during the meeting, including a reduction of tariffs on China from 57% to 47%, all rare earth issues have been resolved, and rare earth trade is no longer obstructed. China immediately began soybean purchases and is fully committed to tackling the fentanyl issue.

Three Major Breakthroughs of the Trump-Xi Meeting: Tariffs, Rare Earths, and Fentanyl

The Trump-Xi meeting lasted for 1 hour and 40 minutes, longer than originally planned. China Central Television reported that the meeting was scheduled to end at 12:30 local time, but the actual extension indicates that the negotiations between both parties were in-depth and fruitful. The closed-door bilateral talks have concluded, and Trump revealed significant outcomes of the discussions to reporters aboard Air Force One.

Core Breakthroughs of the Trump-Xi Meeting:

Significant Tariff Reduction: Tariffs on imports from China will be reduced from 57% to 47%, a decrease of 10 percentage points, which will significantly lower the cost of Chinese goods entering the U.S. market.

Rare Earth Trade Unblocked: All rare earth issues have been resolved, rare earth trade is no longer hindered, and China will continue to export rare earths, addressing major security concerns for the United States regarding critical mineral supply chains.

Fentanyl Cooperation: China agrees to fully curb the fentanyl problem, and the United States immediately reduces the additional tariffs imposed on all Chinese goods due to the influx of fentanyl chemical precursors into the United States.

The reduction of tariffs from 57% to 47% is significant. The fragile ceasefire agreement reached in May reduced the retaliatory tariffs that both sides had previously imposed, which were far over 100%, but trade tensions have escalated again. This further reduction in tariffs indicates both sides' willingness to ease the trade war and create conditions for economic recovery. For American consumers, the tariff reduction will lower the prices of Chinese goods, helping to curb inflation. For Chinese exporters, this will improve competitiveness and increase orders.

The removal of trade barriers for rare earths is equally crucial. Beijing has a monopoly on the processing of key minerals and has strengthened its control over rare earth exports in recent weeks. The circulation of rare earth resources has been a focal point of contention between China and the United States, as these materials are essential for manufacturing electric vehicles, wind turbines, military equipment, and high-tech products. Trump stated, “All rare earth issues have been resolved, and this is true for the whole world… This is a global issue, not just an American problem. The obstacles from China have disappeared.” A U.S. official confirmed, “China will continue to export rare earths.”

The cooperation on fentanyl is directly related to the public health crisis in the United States. Trump stated that Washington and Beijing “have reached a consensus on many issues.” He indicated that the United States will immediately reduce the tariffs imposed on all Chinese goods due to the influx of fentanyl chemical precursors into the U.S. Both sides agreed that China would make every effort to curb the fentanyl problem, which is significant for alleviating the opioid crisis in the United States.

Soybeans, Chips and Future Exchange Program

Trump pointed out that, as previously announced, China will begin large-scale purchases of soybeans, “I appreciate this.” Soybean procurement will start immediately, which is a significant benefit for American agricultural states. During the trade war, China drastically reduced imports of American soybeans, causing huge losses for American farmers. Resuming soybean procurement is not only economically significant but also politically significant, as American agricultural states are an important voter base for Trump.

On the chip issue, Trump stated that both sides did indeed discuss chips, and China will talk with Nvidia and other companies about chip procurement, but there was no discussion about Nvidia's Blackwell chips. Trump mentioned that Beijing will engage in dialogue with Nvidia's CEO Jensen Huang, and pointed out that U.S. authorities play “some kind of referee” role in their discussions. “But there are a lot of chips, which is a good thing for us,” he said.

The Blackwell chip is considered to be NVIDIA's best AI chip, and its exclusion from negotiations shows that the United States still maintains caution regarding core technologies. However, the open procurement of other chips still brings significant business opportunities for NVIDIA and the American semiconductor industry.

The future mutual visit plan indicates a continuous improvement in the relationship between both parties. Trump stated that he will visit China in April, which will be his first visit to China since taking office as president. The Chinese leader will visit the United States afterward, possibly going to Washington D.C. or Palm Beach, Florida. This high-level mutual visit helps establish personal relationships and strategic mutual trust.

Trump also stated that the United States and China will “work hand in hand” on the Ukraine issue. “On the Ukraine issue, we will both cooperate - we both agree that both sides are in fierce fighting, and sometimes you have to let them fight. But we will work together to resolve the Ukraine issue,” he said. This is a one-year agreement that will be extended.

It is worth noting that during the talks with Chinese leaders, Trump stated that he never mentioned the Taiwan issue. Before the talks, there were concerns that this autonomous island would become a pawn in the meeting between the two superpowers, but ultimately the Taiwan issue was not discussed.

Market Reaction: Chinese Stock Market Hits 10-Year High

Earlier today, the Chinese stock market reached its highest point in ten years, showing investors' optimistic attitude towards the Trump-Xi meeting. The Chinese benchmark Shanghai Composite Index has risen over 2% in the past five days, hitting a high of 4025.39 points in the morning session today. This week, global markets have generally risen as Chinese and American officials tried to ease trade tensions, raising hopes for a trade agreement between the two sides.

The US Dollar Index (DXY) remains weak, falling below 99.00, influenced by the agreement reached by both parties. This weakening of the dollar is generally favorable for risk assets and cryptocurrencies. Meanwhile, as of the time of writing, the AUD/USD exchange rate is consolidating below 0.6600. Trump stated that the United States could “quickly” sign a trade agreement with China.

BBC reporters in the UK delved into the scene of the meeting between Trump and Chinese leaders this morning, explaining the content of the talks and why the Chinese leaders felt they entered the discussions with a tough stance. Analysts also anticipate that a final agreement on the sale of TikTok's U.S. business, owned by Chinese companies, will be reached, bringing some stability to an otherwise turbulent competitive landscape.

For the cryptocurrency market, the success of the Trump-Xi meeting has provided a favorable environment for risk assets. The easing of the trade war has eliminated the main uncertainties in the global economy, and the reduction of tariffs along with the resumption of rare earth trade will boost market confidence. Together with the Federal Reserve's interest rate cut cycle and the end of QT, the cryptocurrency market may see a wave of upward momentum before the end of the year.