Trump's Trade Deals and Their Impact on Global Supply Chains and Commodity Markets

The global economic landscape has been irrevocably reshaped by the trade agreements forged under President Donald Trump's second term. From the U.S.-EU deal in Turnberry, Scotland, to the U.S.-China truce in Geneva, these agreements are redefining supply chains, commodity demand, and strategic investments in energy, defense, and rare earth minerals. For investors, understanding the interplay of tariffs, geopolitical leverage, and industrial policy is critical to identifying opportunities in a rapidly shifting market.

Energy Exporters: A New Era of Stability

The July 2025 U.S.-EU trade agreement has cemented the U.S. as a dominant player in the global energy sector. By securing a $250 billion annual LNG purchase commitment from the EU, the deal has provided energy exporters like ExxonMobil (XOM) and Chevron (CVX) with a stable, long-term market. This stability is a stark contrast to the volatile demand cycles that historically plagued the sector. The 15% tariff on EU goods, coupled with exemptions for energy and defense, has created a predictable environment for capital-intensive projects.

ExxonMobil's shares have surged 28% year-to-date, reflecting renewed investor confidence in its ability to capitalize on sustained LNG demand. The company's Permian Basin expansion and Arctic LNG projects are now primed to benefit from this new trade regime. Similarly, Chevron's recent $10 billion investment in U.S. LNG infrastructure aligns with the EU's multi-year procurement plan, positioning it to dominate the transatlantic energy corridor.

However, the EU's reliance on Chinese rare earth elements for green energy technologies (e.g., wind turbines) remains a vulnerability. While the U.S.-China trade deal temporarily eased tensions, China's history of weaponizing rare earth exports—such as its 2024 restrictions on dysprosium and terbium—highlights the need for diversified supply chains.

Defense Contractors: Reshoring and Strategic Alliances

The EU's $600 billion investment in U.S. military equipment and infrastructure has created a golden age for defense contractors. Lockheed Martin (LMT) and Raytheon Technologies (RTX) are set to benefit from a surge in orders for advanced systems, including hypersonic missiles and next-generation fighter jets. The U.S. Department of Defense's $439 million investment in domestic supply chain resilience since 2020 underscores a broader shift toward reshoring critical production.

Raytheon's stock has outperformed the S&P 500 by 15% in 2025, driven by its role in producing radar systems and missile defense platforms under the EU agreement. The company's partnership with European firms to co-develop AI-driven combat systems further amplifies its strategic value.

Yet, the defense sector is not without risks. China's rare earth export controls have disrupted the production of critical components, such as magnets used in guided missiles. This underscores the importance of investing in companies like MP Materials (MP), which is building the first U.S. magnet manufacturing facility in Fort Worth, Texas.

Rare Earth Minerals: A Geopolitical Bottleneck

Rare earth elements (REEs) have become the new oil of the 21st century, with the U.S.-China trade agreement serving as both a lifeline and a warning. While the May 2025 Geneva deal temporarily stabilized supply, China's control over 70% of global rare earth processing capacity ensures that tensions will persist.

Investors should focus on companies building alternatives to Chinese dominance. MP Materials is a standout, having secured a $550 million U.S. government investment to expand its Mountain Pass mine and magnet production. The company's $500 million supply agreement with Apple also highlights its growing influence in the EV and consumer tech sectors.

In Australia, Lynas Rare Earths (LYC) is leveraging government support to expand its Kalgoorlie processing facility, while Arafura Resources (ARU) is advancing its Nolans project with a $200 million investment from the National Reconstruction Fund. These firms are critical to reducing reliance on China for heavy rare earths like dysprosium and terbium, which are essential for defense and green energy applications.

Strategic Investment Opportunities

For investors, the key lies in diversifying across sectors that align with these trade dynamics:

1. Energy Exporters: Prioritize LNG producers with long-term EU contracts, such as ExxonMobil and Chevron.
2. Defense Contractors: Target firms with EU procurement ties, including Lockheed Martin and Raytheon Technologies.
3. Rare Earth Firms: Bet on companies building self-sufficient supply chains, such as MP Materials, Lynas Rare Earths, and Arafura Resources.

Risks and Considerations

While these opportunities are compelling, investors must remain cautious. The U.S. faces legal challenges to its tariff policies, with the Court of International Trade ruling that Trump overstepped his authority under the IEEPA. Additionally, China's ability to retaliate—such as through rare earth export restrictions—could reignite trade tensions. Diversification and hedging against geopolitical risks are essential.

Conclusion

Trump's trade deals have ignited a strategic realignment of global supply chains, with energy, defense, and rare earths at the forefront. For investors, the path to resilience lies in supporting companies that are not only adapting to this new order but also shaping it. By investing in energy exporters, defense contractors, and rare earth innovators, portfolios can hedge against volatility while capitalizing on the next industrial revolution. The future of global trade is being rewritten—now is the time to position accordingly.