In a high-wire diplomatic feat that President Donald Trump branded a “12-out-of-10” masterstroke, he and China’s Xi Jinping clinched a sweeping one-year trade truce during Thursday’s 105-minute summit at Gimhae Air Base in Busan, South Korea – slashing U.S. tariffs on Chinese imports from a punishing 57% average to 47%, halving the 20% fentanyl precursor levy to 10%, locking in China’s pledge for 12 million metric tons of U.S. soybeans by January with 25 million tons annually over the next three years, and suspending Beijing’s October 9 rare earth export controls for a full 12 months.
Aboard Air Force One en route home, Trump beamed about “enormous respect” from Xi, revealing the leaders greenlit Nvidia chip purchase talks – excluding next-gen Blackwell models – while waiving reciprocal port fees, advancing TikTok ownership resolutions, and teasing mutual state visits: Trump to Beijing in April, Xi to Washington shortly after. U.S. Treasury Secretary Scott Bessent, fresh from Fox Business, quantified the soybean bonanza at “$10-15 billion annually,” urging farmers to “buy more land and bigger tractors” – echoing Trump’s Truth Social post. China’s Commerce Ministry corroborated the rare earth pause, vowing steady supplies of the 90% globally processed minerals essential for electric vehicles, fighter jets, wind turbines, and smartphones.
This phase-one reloaded pact – ratified after pre-summit negotiators hashed details in Malaysia – yanks both superpowers from the brink of all-out escalation. Recall the 2025 flashpoints: Trump’s January fentanyl tariffs sparked Beijing’s soybean boycott, cratering U.S. exports 29% through August and inflicting $5.7 billion in farm losses as Brazil scooped China’s 105 million-ton annual import pie (versus Beijing’s meager 20 million domestic output). Then came Xi’s October 9 bombshell: export curbs on rare earth magnets, processing tech, battery gear, and industrial diamonds, prompting Trump’s 100% import tax threat. Enter Busan: No Taiwan chit-chat, no semiconductor overhauls, but pragmatic de-escalation averting a 1% U.S. GDP hit and 5.3% Chinese inflation spike.
Markets Roar, Then Recalibrate:
The announcement ignited fireworks. Chicago Board of Trade soybean futures – November 2025 contract – exploded to a 15-month high above $11 per bushel, settling Thursday at $10.93-3/4 (up 2.3%), before Friday profit-taking nudged it toward $10.80 amid broader commodity wobbles. China wasted no time: Traders confirmed four additional U.S. cargoes snapped up today – ~250,000 tons for late-2025/early-2026 shipment – underscoring the $87 billion multi-year commitment’s gravity. Rare earth proxies soared: U.S. miner MP Materials jumped 5-10% intraday on the supply lifeline, though pared as the one-year sunset loomed. Nvidia? Flat near $202 in its $5 trillion valuation chase, buoyed by “lots of chips” talks but shielded by intact Blackwell bans and CHIPS Act firewalls.
S&P 500 futures eked modest gains, $50 billion+ import savings promising 10% cheaper gadgets for U.S. consumers without stoking inflation. Yet Reuters analysts flagged “cautious euphoria”: $580 billion bilateral imbalances, IP theft, and subsidies fester untouched.
Xi’s Subtle Power Play:
Dialogue as Weapon State media portrayed Xi as the global statesman, decrying a “vicious cycle” of retaliation and pitching joint ventures on AI governance, illegal immigration crackdowns, anti-money laundering, and pandemic prep. “Both sides should prioritize long-term cooperation,” he intoned, per Xinhua – a velvet glove over Beijing’s iron grip on critical minerals and $1.5 trillion trade flows. Commerce Secretary Howard Lutnick, inside the room, gushed to Fox: “A master class in classy, elegant power” from Trump.
Leverage Imbalance Exposed? Not everyone’s toasting. Ex-Trade Rep Robert Lighthizer blasted a “strategic surrender,” warning China “de-fangs nothing” long-term. Atlantic Council dubbed it “tactical timeout,” with Peterson Institute sighing “no true winners” absent reforms. On X, divides sharpened: Jesse Watters cheered “trade win,” while critics like @EconomicsMajozi crowed Xi “outsmarted” Trump on rare earths and soy. @islandinthemoon sneered: “Moronic trade war – Xi holds the balls.” Shenzhen street polls? Split: “Economy boost” vs. “Temporary band-aid.”
Global Chessboard Shifts Brazilian soy barons reel, ceding 25% Chinese market share. Europe inhales steadier chips; Alaska pitches $20 billion oil/gas to supplant Russia. India/Indonesia diversify; South Africa’s rand dipped on dollar strength. BRICS fractures? Maybe – but APEC optics burnish Xi amid property woes.
The One-Year Sword of Damocles Malaysia follow-ups loom as annual reviews bake in uncertainty. Base scenario (60%): Renewal juices U.S. GDP +0.5%. Bear (30%): Collapse reignites 60% tariffs, mineral Armageddon. Bull (10%): Full thaw unlocks tech. USDA/USGS dashboards will track; midterms add volatility.
