Navigating the Trump Trade: How US-China Tariff Truce and Energy Price Shifts Reshape Commodity Exposure

The global economic landscape in 2025 is defined by two seismic forces: the U.S.-China tariff truce and the divergent trajectories of energy and commodity prices. These dynamics are reshaping supply chains, recalibrating trade flows, and creating both risks and opportunities for investors. As President Donald Trump's administration extends its 90-day tariff pause with Beijing, the interplay between geopolitical diplomacy and market fundamentals demands a strategic reevaluation of portfolio positioning.

The U.S.-China Tariff Truce: A Temporary Buffer, Not a Resolution

On August 11, 2025, the U.S. and China extended their tariff truce until November 10, maintaining U.S. tariffs on Chinese goods at 30% and Chinese retaliatory tariffs on U.S. exports at 10–15%. This pause, initially agreed in May, was a tactical move to avoid a trade war ahead of the critical holiday season and potential high-level talks between Trump and Xi Jinping. While the truce has stabilized bilateral trade for now, it masks deeper structural issues—such as U.S. concerns over Chinese industrial subsidies and Beijing's leverage in rare earths—leaving long-term uncertainty.

For investors, the truce offers a window to hedge against short-term volatility but should not be mistaken for a permanent détente. The U.S. has also pursued reciprocal tariffs on other trade partners, including a 50% duty on Brazilian exports and a 35% tariff on Canadian softwood lumber, complicating global supply chains. These actions highlight a broader shift toward protectionism, which could fragment trade networks and increase costs for import-dependent sectors.

Energy and Commodity Divergence: Oil's Weakness and Rubber's Resilience

While the U.S.-China truce has eased trade tensions, energy markets tell a different story. WTI crude prices have fallen to $67.33 per barrel as of August 1, 2025, pressured by OPEC+ oversupply fears and weak U.S. jobs data. reveals a bearish trend, with analysts projecting further declines if demand growth in China and India falters. This weakness contrasts sharply with the Japanese rubber futures market, where prices have surged to a 12-year high of 172 U.S. cents per kilogram.

Japan's rubber boom is driven by two forces: supply-side constraints and the EV revolution. Thailand, the world's largest rubber producer, faces a 10–15% output decline in 2025 due to leaf drop disease and aging plantations. Meanwhile, EVs require 10–15% more natural rubber than traditional vehicles, with Asia projected to account for 40% of global EV sales by 2030. underscores this divergence, with prices expected to stabilize around 150.65 cents per kilogram in 12 months.

Strategic Portfolio Positioning: Balancing Short-Term Volatility and Long-Term Fundamentals

Investors must navigate these conflicting trends by adopting a dual strategy: hedging against near-term trade risks while capitalizing on structural shifts in energy and commodities.

1. Energy-Linked Commodities: A Tale of Two Markets
2. Oil: The bearish outlook for crude prices suggests caution in energy equities. However, the U.S. government's novel revenue-sharing agreements with tech firms like Nvidia and AMD—where they pay 15% of AI chip sales in China to the federal government—indicate a new era of monetized trade policy. This model could extend to energy sectors, creating hybrid opportunities for investors.

3. Natural Gas and LNG: With China's retaliatory tariffs on U.S. LNG exports still in place, U.S. producers face headwinds. Yet, the truce's extension may pave the way for tariff reductions in the coming months, offering a potential upside for companies like Cheniere Energy or Kinder Morgan.

4. Trade-Sensitive Equities: The Rubber Sector as a Case Study
   The Japanese rubber market's resilience presents a compelling case for sector-specific investments. Bridgestone and Sumitomo Rubber Industries are leading R&D efforts in high-performance EV tires, with partnerships with battery producers like Panasonic. highlights its outperformance, driven by EV demand and strategic supply chain adjustments. Investors should also consider synthetic rubber producers like JSR Corporation, which benefit from oil price declines by reducing production costs.

5. Geopolitical Hedging: The Role of Diversification
   The U.S.-China truce is a temporary reprieve, not a resolution. Investors should diversify exposure to trade-sensitive sectors by allocating to companies with multi-regional supply chains. For example, tire manufacturers with operations in Vietnam or Indonesia—where rubber production is expanding—can mitigate risks from U.S.-China tensions.

Conclusion: A Portfolio for the New Normal

The 2025 trade and energy landscape is defined by duality: a fragile U.S.-China truce coexists with divergent commodity trends. Investors must balance short-term volatility—such as the U.S.'s reciprocal tariffs on Brazil and Canada—with long-term structural shifts, like the EV-driven rubber boom. A strategic portfolio would overweight EV-related commodities, hedge energy exposure through synthetic rubber and LNG, and maintain flexibility to adjust as trade negotiations evolve.

As the November 10 deadline looms, the key to success lies in agility. The Trump trade era is not about predicting the future but preparing for multiple scenarios. In this environment, the most resilient portfolios will be those that combine tactical agility with a deep understanding of the forces reshaping global markets.