Insights 
VT 
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.
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.
US-China Trade Conflict History
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.
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.
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.
Potential Market Reactions
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.
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.
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.
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.
