The US Treasury Secretary announced hopes for a rare earths deal between the US and China by Thanksgiving. Following a meeting in Korea between Presidents Trump and Xi, there’s confidence China will uphold their commitments. <\/p>\n
Currently, the US Dollar Index shows a 0.08% increase, trading at 99.37. A trade war exists as an economic battle due to protectionism, creating trade barriers and escalating costs. <\/p>\n
The US-China trade conflict began in 2018 with US tariffs on China over alleged unfair practices and intellectual property issues, prompting China’s retaliatory tariffs. A Phase One trade agreement in 2020 aimed to ease tensions, though the pandemic shifted attention elsewhere. President Biden maintained existing tariffs, adding some new ones. <\/p>\n
Donald Trump’s return as US President in 2025 reignited tensions, with proposed 60% tariffs on China resuming past conflicts. This ongoing trade war impacts global supply chains, reduces spending, and influences Consumer Price Index inflation.<\/p>\n
With a potential rare earths deal on the table by Thanksgiving, we see a clear, short-term event to trade against. Given the harsh 60% tariffs imposed by the Trump administration back in January 2025, any sign of cooperation is a major market signal. The word “hopefully” introduces just enough doubt to create a trading opportunity around the outcome.<\/p>\n
We expect a significant move in volatility, so option strategies that profit from price swings could be effective. Looking back, we saw the VIX index spike over 40% in a single week in May 2019 after unexpected tariff announcements. A similar, sharp move is likely if these talks fail, making a strangle on a broad market index a potential strategy.<\/p>\n
For a direct play on the deal itself, we should look at call options on the VanEck Rare Earth\/Strategic Metals ETF (REMX). China continues to dominate over 85% of global rare earth processing, a statistic that hasn’t changed much in years, so an agreement securing US supply would be a huge relief for the sector. We saw shares in domestic producers like MP Materials surge on any hint of de-escalation during the first trade war.<\/p>\n
The currency markets will also be sensitive, particularly the relationship between the US dollar and the offshore yuan (CNH). Historically, progress on trade has led to a stronger yuan, as it signals a more stable economic outlook for China. A confirmed deal would likely push the USD\/CNH pair lower, presenting an opportunity in currency futures.<\/p>\n
This potential agreement is also a key signal for the tech and electric vehicle industries, which depend heavily on these materials for magnets and batteries. A successful deal would ease supply chain fears that have weighed on the Nasdaq 100 all year. Buying short-dated call options on the QQQ ETF could be an effective way to trade this potential upside relief.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" US, China aim for rare earths deal by Thanksgiving amid renewed trade tensions and global economic impacts.<\/p>\n","protected":false},"author":62,"featured_media":16960,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-35030","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/35030","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=35030"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/35030\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/16960"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=35030"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=35030"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=35030"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}