Trump Declares China Deal 'Done'—Markets Wait for the Fine Print

Despite headlines declaring that a trade deal between the United States and China is "done" the reality remains far less definitive. President Trump took to his social media platform early Wednesday to proclaim the agreement was finalized, subject only to final approval from himself and Chinese President Xi Jinping. However, U.S. Commerce Secretary Howard Lutnick quickly tempered the enthusiasm, confirming that no written framework exists. While the two nations have reached a handshake understanding following talks in London, the details remain vague, and the markets—though reacting positively—are still awaiting clarity.

The discussions in London were a follow-up to the Geneva trade truce announced in May. At their core, the meetings aimed to revive that agreement and lay the groundwork for easing tariffs and restoring cooperation. According to Lutnick, the U.S. and China reached consensus on several points, including accelerated Chinese export approvals for rare earth minerals and magnets critical to American manufacturing. Trump emphasized that China will provide these materials "up front" as part of the deal, which is seen as a lifeline to sectors such as autos, chips, and defense.

However, Lutnick and other officials were clear: while there is agreement in principle, there is no text, no implementation timeline, and no confirmed scope of concessions. As Lutnick stated plainly, "We used plane parts and ethane as bargaining tools, but we are not giving China our best chips". China has reportedly refused to halt fentanyl-related shipments, and the U.S. side confirmed that existing tariff levels will remain in place. The 55% U.S. tariff rate includes a 10% baseline, 20% related to fentanyl, and 25% from Trump-era Section 301 duties. China, in comparison, faces only a 10% tariff.

Dan Ives of Wedbush noted that the rare earth concessions are a positive step for the tech sector but emphasized that this is only the beginning. "Chip deals are likely next", he said, highlighting that ongoing discussions may address export controls that have prevented companies like Nvidia from selling AI chips to China. Ives called the framework a "relief for tech investors", but warned that unresolved issues like tariff burdens and export licensing remain hurdles.

The markets responded favorably but cautiously. The S&P 500 rose in early trading, led by gains in semiconductor and materials stocks. Rare earth stocks in particular surged on the news that China would immediately begin processing U.S. applications for magnet-related exports. However, the lack of concrete documentation continues to hold back broader risk appetite. Traders are looking for written confirmation and formal ratification by both leaders before pricing in more optimistic scenarios.

Much of the intrigue stems from the vague language used by officials on both sides. Chinese negotiators, led by Vice Premier He Lifeng, acknowledged the existence of a handshake deal and agreed in principle with U.S. goals. Still, no specific enforcement mechanisms or timelines were disclosed. Lutnick himself acknowledged that any real progress hinges on President Xi's approval and formal publication of the agreement.

Rare earth elements remain at the heart of the dispute. The U.S. has accused China of slow-walking export licenses, throttling supply of key inputs for semiconductors, electric vehicles, and defense technologies. In turn, China has demanded a loosening of U.S. export restrictions on jet engine parts, chip design software, and other high-end technologies. While Trump has agreed to allow Chinese students to study in U.S. colleges, there’s little evidence that broader tech access will be granted.

Analysts remain wary of the underlying fragility of the truce. Howard Lutnick made clear that other deals are in the pipeline. Yet even he acknowledged that the path forward depends on whether the U.S. and China can avoid further escalation without a robust enforcement mechanism. As Shan Guo of Hutong Research put it, "There is little political trust in each other. Both sides would want deterrence to prevent the other side from violating the truce".

For now, markets will continue to respond to headlines, but without a signed, detailed framework, the latest round of U.S.-China talks remains more smoke than fire. Investors should stay focused on the next key developments, including potential concessions on chip exports and enforcement mechanisms on rare earth supply. Until those materialize in writing, the so-called "deal" will remain more aspirational than actionable.