Impact of the US-China Trade Deal on the Global Markets

The historic meeting between US President Donald Trump and Chinese Premier Xi Jinping has raised hopes of a “tariff truce” between the two nations. The hopes were further fuelled by Trump’s comments that the talks were “amazing” and had helped resolve “major trade issues.” The US-China trade deal includes purchase commitments from China of US agricultural products, especially soybeans, while eliminating China’s export restrictions on critical minerals, including rare earths. Both nations also agreed to lower tariffs and pause port fees.

Easing Uncertainty in Financial Markets

The rising trade conflict created significant market volatility through 2025. Businesses did not know the cost of future imports or exports, which also left investors in uncertainty. With a US-China trade deal on the horizon, fears of uncertainty have lessened. When companies can plan for the long term again, market sentiment improves. This generally leads to better performance of the financial markets.

However, the deal’s full effect isn’t immediate. And it is important to remember that some deals have failed to fully revive global demand in the past. Manufacturing continued to weaken in Europe and Asia through November due to sluggish demand and geopolitical uncertainties beyond the US-China relationship. This shows that a trade deal alone cannot fix all global economic problems. 

Still, lowering tariffs, such as halving the fentanyl tariff rate from 20% to 10% and freezing some Chinese duties, is a clear benefit.

How Will the Trade Deal Affect the Stock Markets?

The stock markets tend to react quickly to trade news. A trade deal is usually a very positive signal. When the deal progresses, indices like the S&P 500, Dow Jones and China’s Shanghai Composite, often rise. This happens because corporate profits increase when companies save on tariffs. In fact, the US-China trade deal raised hopes across the world, with the Stoxx 600 rising 0.2% and Japan’s Nikkei 225 breached 50,000 for the first time, closing up 2.46%, in the lead-up to the Trump-Xi meeting on October 27.

Historically, specific sectors see the biggest moves following much-awaited trade deals. Manufacturing and technology companies often see the largest jump, since they rely heavily on global supply chains. Agricultural stocks could also benefit. American soybean farmers, for example, see a clear positive path due to the US-China trade deal.

Shifts in the Forex Markets

A trade agreement with the US historically stabilises the Chinese yuan (CNY) by reducing pressure on China to devalue its currency to offset tariffs. The CNY gained strength through November, with the USD/CNY declining almost 1% through the month.

The impact on the US dollar (USD) is likely to be mixed. A strong trade deal can boost the USD because it signals a healthy global economy. However, if a deal reduces global fear, investors may move funds out of safe-haven currencies like the USD. Also, interest cuts by the Fed could weaken the greenback.

Commodities Market Impact

The commodities sector could see sharp changes. Agricultural goods are most affected by the deal. US soybean exports will become cheaper and more attractive to China, which will boost soybean prices. On the other hand, China controls much of the world’s supply of rare earths. These are vital for the technology and defense sectors. The US-China trade deal impacts how easily these commodities can be traded, which will affect both commodity prices and the stocks of companies that mine or use them.

Industrial commodities, like oil and copper, could also be affected. A good trade deal signals stronger global economic growth, which means more manufacturing. This, in turn, increases the demand for oil and base metals. Therefore, oil and copper prices could rise with a US-China trade deal.

How to Trade the US-China Deal

The sectors that face the highest tariff relief and benefit from easing supply chains uncertainties are likely to see gains. These include tech, mining and industrials stocks, which are especially sensitive to trade tensions. In addition, stocks of companies that export heavily to China could also benefit. As uncertainty fades, money may move from defensive sectors (like utilities) to cyclical sectors (like industrials, technology).

However, it is important to keep an eye on other factors moving the markets. For instance, retail stocks historically outperform during the holiday season.

Forex traders could keep an eyeon short-term USD or CNY swings on major news. Economic data from the US hint at the economy beginning to cool off, which could lead the Fed to announce a further rate cut. This is likely to weaken the US dollar. Any positive news associated with the US-China trade deal could encourage traders to move away from safe-haven currencies. So, monitor economic and trade data.

The trade deal could push the prices of industrial commodities, such as silver and copper, up. While it would also traditionally drive oil prices higher, a potential oversupply might counter such an impact. In addition, the global supply chain agreements on rare earths will be key. Keep an eye on supply access news to make informed trading decisions.

To Sum Up

• The meeting between President Trump and Xi Jinping on October 30, 2025, has given hope to businesses and investors.
• In anticipation of a US-China trade deal, US tariffs were lowered, while Chinese duties on certain exports were frozen and restrictions on rare earth exports were removed.
• Indices worldwide reacted positively to the news.
• The USD/CNY declined as the Chinese yuan gained strength.
• The trade deal is expected to positively impact stocks of tech, industrials and mining companies.
• Industrial commodities, such as copper and oil, could rise in price.
• It is also important to keep an eye on other factors moving the markets for informed decision making.

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