Client Update - 31st October 2025

No Halloween jokes needed, as this week I must revert to a familiar supernatural force – that of US President Donald Trump. The trade “conflict” between the US and China has caused market volatility to increase in recent weeks, so if we are to believe the news this week, any improvement in this relationship is good news for clients’ portfolios.

As I write on Thursday, President Trump and Chinese Premier Xi Jinping have agreed to postpone export controls on rare earths and computer chips as part of a broad one-year trade deal agreed (but not signed) at a summit in South Korea. The US and China said they also reached agreements on American tariffs related to fentanyl and tit-for-tat levies on each other’s shipping industries, as both leaders sought to ease tensions in what was their first meeting in six years.

Get ready for some classic Trump quotes. “It was an amazing meeting, on a scale of 0-10, with 10 being the best, the meeting was a 12.” Who knew. Trump said they had agreed on an “outstanding group of decisions” and that the US and China would sign a trade deal “pretty soon”. “We have not too many stumbling blocks,” Trump said. “Every year, we will review the deal, but I think the deal will go . . . long beyond a year.” Phew, that’s enough quotes.

A trade truce had been set to expire next month, threatening the reinstatement of tariffs of more than 100%. Trump said the two sides had settled the dispute over rare earths, minerals critical to global manufacturers. Rare earths are a group of 17 metals found in the periodic table that are important for making things like smartphones, electric cars, and wind turbines. They are called "rare" not necessarily because they are hard to find, but because they are rarely found in large clumps, so a lot of rock has to be processed to get small amounts of these metals.

China dominates the supply chain for rare earths and imposed sweeping export controls earlier this month that sparked a sudden escalation in tensions. Trump said he had agreed to cut the fentanyl-related tariff on China from 20% to 10% because Xi had pledged “to work very hard” to stem exports of the chemical ingredients for the opioid. The reduced fentanyl tariff brings average levies on imports from China to 45%. Trump said the leaders had also discussed semiconductors, and that Nvidia would talk to China about exporting these chips. The US President said he would visit China in April and that Xi would make a reciprocal visit to the US. Some experts had expressed concern that the US President might make concessions on Taiwan — over which China claims sovereignty — to facilitate a deal, however Trump confirmed that the subject was not discussed.

While Trump predicted that the deal is long lasting, the suggested deal is still due to be renegotiated each year, with no intention toward some over-arching, permanent agreement between the world’s two largest economies and certainly no bilateral-trade treaty had been agreed.

The best that the sides appear able to manage, against the broad backdrop of serious one-upmanship, is to placate immediate concerns of a further escalation, however Trump’s deep resentment over US trade deficits will hardly disappear. Therefore, I fear we have not heard the last of this, but for now, I will take the good news on offer. Do have a good weekend.