The U.S. and China Are (Almost) Making Up - Here’s Why It Matters for Your Portfolio

On a humid Sunday morning in Kuala Lumpur, diplomats rushed between hotel ballrooms and reporters crowded the corridors as the world’s two largest economies finally seemed ready to exhale.

After months of tension and mutual threats, the United States and China have agreed on the outline of a deal that could pull their trade relationship back from the edge.

It is not peace, exactly, but it is a pause - a moment when both sides appear more interested in stability than in escalation.

At the center of it all are 17 little-known elements that quietly power the modern world: rare earth minerals.

The Minerals That Make the World Go Round

You probably use rare earths dozens of times a day without realizing it. They are in the magnets that make your phone vibrate, in the batteries that power electric cars, and in the turbines that spin on wind farms. They also make headphones hum, laptops run faster, and satellites stay on course.

These elements are not truly rare, but they are incredibly difficult to mine and refine. And that is where China holds the upper hand.

China produces about 90 percent of the world’s refined rare earths, giving it enormous influence over the global technology supply chain.

When Beijing hinted earlier this year that it might tighten exports, markets panicked. Prices jumped, manufacturers scrambled to find alternatives, and investors braced for yet another supply chain crisis.

One economist summed it up simply: “Rare earths are the new oil.” Whoever controls them, controls the future of technology.

The Deal That Almost Wasn't

That is why this weekend’s announcement matters so much. U.S. Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer spent days negotiating with China’s Li Chenggang and He Lifeng, trying to prevent what analysts were calling “Tariff Armageddon.”

Trump had threatened to impose 100 percent tariffs on all Chinese imports starting November 1. China, in turn, had prepared to expand its restrictions on exports of rare earths and the magnets made from them. The result would have been chaos: higher prices for consumers, major headaches for companies, and a shock to global markets.

Instead, after a weekend of tense talks, the two sides reached a temporary framework. China will delay its export controls for a year, and the United States will pause new tariffs. Agricultural trade, including soybean exports, will resume.

Greer called it “a framework the leaders can review.” Not a final deal, but a small step toward calm in a relationship defined by mistrust.

Power, Dependence and the Quiet Race for the Future

Behind the polite statements, this deal tells a bigger story. The U.S. and China are locked in a long-term struggle for control over the technologies that will shape the next century.

China’s Ministry of Commerce has been tightening control over exports of machinery and materials used to make semiconductors, solar panels, and electric vehicles. The United States, meanwhile, has been limiting exports of advanced AI chips and defense-related software to China.

Each side is trying to secure its own supply chains and protect its technological advantage. Economists call this slow separation “decoupling.” It is the gradual unwinding of an economic relationship that has shaped the global order for decades.

Because when officials talk about rare earths, they are really talking about who will lead the next industrial revolution.

How Markets Might Respond

After Sunday’s meeting, markets are already reacting with relief, posting gains across Asia and Europe as optimism about the trade thaw builds. Following the news, rare earth oxide prices dropped about 3–4% Monday morning.

Tech and electric vehicle companies could benefit from a more stable supply of critical materials. Inflationary pressure might ease slightly as global trade flows improve. Investor confidence in Asia could tick upward.

But nothing is certain. Officials are calling it a “strategic stabilization agreement”, not even a truce. China’s Ministry of Commerce has emphasized that the deal depends on continued “constructive dialogue,” and it’s not binding until leaders approve it this week.

So this agreement is fragile, and it could fall apart with a single headline. Markets have learned that calm can be temporary, and optimism can vanish overnight.

What This Means for Female Invest Members

If you are new to investing, here is the simple truth: politics and investing are always connected.

When world leaders negotiate tariffs and trade rules, it affects the companies inside your investment funds, the cost of your smartphone, and even the performance of your pension plan.

This story is also a reminder of why diversification matters.

A portfolio that includes global funds can help cushion you against sudden political or economic shocks in any single region.

So while world leaders debate in distant meeting rooms, remember that what they decide can ripple directly into your finances.

The Bigger Lesson

It can be tempting to tune out stories about trade talks and tariffs. They sound abstract, slow-moving, and far away. But these moments shape the world we live in - and the economy we invest in.

When negotiations succeed, the result can be lower costs, steadier markets, and more predictable growth. When they fail, it can mean higher prices, supply chain shortages, and fear in the markets.

As Trump and Xi prepare to meet on Wednesday in South Korea, investors everywhere will be watching closely. For now, there is relief, but also realism. This is not the end of a rivalry, only a temporary pause in it.

Still, cooperation matters. And for every investor trying to build wealth in an unpredictable world, that small measure of stability is worth a great deal.