Wall Street almost flat on US-China trade deal suspense

• But US stock futures surged after Trump announced a dramatic US-China trade deal on Truth, while US core CPI came slightly colder than expected

·       The day of the London talks resulted in a framework for earlier Geneva and Trump-Xi talks consensus including the rate earth materials issue; no real progress

·       The next US-China delegation-level talks will be on August 10; the last deadline so far

·       Trump is busy with LA civil riot-like situations, while Musk expressed regret over some of his anti-Trump comments and escalated public spat

·       Gold, Silver slips on US-China trade talks progress, while oil surged on hopes & hypes of US-Iran nuclear deal

Wall Street Futures were buoyed in the last few days on hopes of meaningful progress in US-China trade deal 2.0 amid the 2nd meeting in London from June 9, 2025. High-level delegations from the US and China convened at Lancaster House in London on June 9, 2025, for the second round of trade negotiations aimed at de-escalating a trade war between the world’s two largest economies. The talks extended into a second day on June 10, focusing on critical issues such as tariffs, rare earth mineral exports, and access to advanced technology. The discussions followed a temporary 90-day tariff truce agreed upon in Geneva in May 2025 and a phone call between U.S. President Donald Trump and Chinese President Xi Jinping on June 5, 2025.

The U.S. delegation comprises Treasury Secretary Scott Bessent; Commerce Secretary Howard Lutnick and the USTR (Trade Representative) Jamieson Greer. The Chinese delegation was Vice Premier He Lifeng, the lead economic representative, supported by other Chinese economic officials, including Vice Finance Minister Liao Min and China International Trade Representative Li Chenggang. The UK provided the venue and logistics at Lancaster House but did not participate in the talks, emphasizing its support for free trade and opposition to a trade war.

This follows after Trump & Co. accused China of violating the spirit of the Geneva agreement by not supplying rare earth materials and magnets to the US. After the much-awaited Trump-Xi phone call, China allowed the export of that critical mineral to the top three US automakers, while the US also lifted the export restrictions of nuclear power-related machinery to China.  On June 10, 2025, a framework agreement was reached between the US and China, signaling progress but leaving deeper trade tensions unresolved.

Framework Agreement: The June talks resulted in a framework to maintain the 90-day tariff truce established in Geneva in May 2025. China agreed to ease restrictions on rare earth mineral exports, and the US committed to adjusting retaliatory measures, reducing tariffs on Chinese goods from 145% to 30% and Chinese tariffs on US goods from 125% to 10%. The framework agreement reached in London aims to maintain this truce and prevent tariffs from reverting to triple-digit levels by August 10, 2025, though no permanent resolution was achieved. On June 10, 2025, both sides agreed on a framework to stabilize the trade truce, with China committing to ease export restrictions on rare earths. However, the agreement lacks detailed commitments and does not resolve fundamental disputes over tariffs and China’s state-led economic model, which Trump wants to change with greater access (Open up China policy for more US goods and services).

Rare Earth Minerals and Magnets: China’s near-monopoly on rare earth minerals and magnets, crucial for US electric vehicles, aerospace, semiconductors, and military applications, was a central focus. The U.S. accused China of slow-walking commitments from the Geneva agreement to resume shipments, risking production disruptions. China agreed to temporary export licenses for rare earth suppliers to the top three U.S. automakers, addressing some concerns.

Technology Access: China pushed for greater access to U.S. high-end technology, including computer chips, while the U.S. sought to maintain restrictions due to national security concerns, particularly regarding advanced semiconductors with military applications.

Ongoing Monitoring: Both sides are using a consultation mechanism from the Geneva Agreement to monitor compliance with the consensus reached so far, particularly on rare earth exports and technology access. No new public reports indicate significant advancements or breaches since June 11, 2025.

Continued Negotiations: The two sides have until August 10, 2025, to negotiate a more comprehensive deal to avoid tariff escalation. A consultation mechanism for trade and economic issues was established to facilitate ongoing dialogue.

Positive Sentiment:  U.S. officials, including Commerce Secretary Howard Lutnick, described the talks as going “really, really well,” while President Trump expressed optimism, citing “good reports” from his team. Chinese Vice Premier He Lifeng also noted a constructive atmosphere. In short, the US-China trade talks in London on June 9-10, 2025, resulted in a framework agreement to maintain the existing 90-day tariff truce. The optimism stemmed from reports by US Commerce Secretary Howard Lutnick and China's Vice Commerce Minister Li Chenggang, confirming progress in easing trade tensions, including China's commitment to relax restrictions on rare earth mineral exports and the US adjusting retaliatory measures.

China’s Vice Premier He Lifeng

·       Chinese and US negotiators have, in principle, reached a framework for implementing the consensus reached by the two heads of state during the phone call on June 5th and the consensus reached at the Geneva meeting

·       Described the talks as part of the ongoing consultation mechanism, emphasizing progress without specifying concessions

·       China's stance on trade issues with the US is clear and consistent

·       China not willing to fight but not afraid to fight

·       Two sides should enhance consensus

·       Both should strengthen cooperation

·       Should push for stable and long-term China-US trade and economic ties

·       China is sincere in trade and economic consultations but has its principle

Chinese official Li Chenggang:

·       No winners in the trade war

·       Keep communicating with the US

·       Consensus with US on Geneva talks

·       Hopes progress conducive to building trust

·       Teams will report back to their leaders

·       Talks with the US on trade rational, candid

·       Reached consensus with US on Geneva agreement

·       There is no further information to offer on the us-china meeting in London

U.S. Commerce Secretary Howard Lutnick

·       We have reached a framework to implement the Geneva Consensus and the call between the two presidents

·       Lutnick to return to Trump for approval

·       US, China Reach Framework for Implementation with Lutnick

·       Expect rare earths and magnets topic will be resolved

·       President Xi and Trump provide a fundamental foundation

·       Reached a framework with China, if approved will implement the Geneva agreement

·       China-U.S. agree on a framework to implement the Geneva trade Consensus after the second day of London talks

US Treasury Secretary Bessent:

·       We have had 2 days of productive talks, and are ongoing

·       Talks will be continuing as needed.

·       Trade talks with China will continue

·       Bessent leaves London for Congressional testimony, but U.S.-China trade talks continue

U.S. economic adviser Kevin Hassett

·       Emphasized securing a “handshake commitment” from China to ensure a steady supply of rare earth materials

·       Highlighted the need for a firm commitment from China on rare earth supplies to prevent U.S. production outages.

U.S. President Trump: “Only getting good reports” from the London talks, following a “very positive conclusion” from his call with Xi Jinping.

Summary

Both U.S. and Chinese officials confirmed that negotiators reached a framework agreement to implement the consensus from the Geneva meeting in May 2025 and the June 5, 2025, phone call between President Trump and Xi. This framework aims to stabilize the 90-day tariff truce, addressing issues like rare earth mineral exports and tariff reductions. However, it requires approval from both Presidents before implementation. The agreement marks progress but leaves deeper trade disputes unresolved, with further negotiations needed before the August 10, 2025, deadline to avoid tariff escalation.

The US and China de-escalated trade tensions, agreeing to a preliminary deal on how to implement the consensus reached in Geneva, negotiators for both sides said. While the full details of their accord weren’t immediately available, US negotiators said they “absolutely expect” that issues around shipments of rare earth minerals and magnets will be resolved with the framework implementation.

Chinese Vice Premier He Lifeng said on Wednesday that China's stance in trade talks with the US is "clear and consistent," adding that Beijing is sincere in its hopes to reach a solution but will stand by its principles. Earlier, negotiators from China and the US said they reached a preliminary trade framework following several rounds of talks. He urged the US to keep its promises and deliver on the bilateral agreements. He also warned that Beijing is "not willing to fight but not afraid to do so if needed," calling on both sides to enhance consensus and maintain communication to "reduce misunderstandings." He stressed the need for long-term trade and economic ties between the world's two largest economies.

Conclusions

China’s Xi believes in protocol-based trade diplomacy in contrast with Trump’s Truth/Twitter-based bullying strategy. But as a ‘courtesy, Trump may withdraw his Fentanyl tariff (20%) against China to ease restrictions on rare earth material exports.  Overall, Trump’s trade negotiations with various countries like China, India, the EU, South Korea, Japan, Mexico, Canada and Vietnam are progressing and Trump may again extend his July 9  (ROR) and August 31 deadline (China) to least December 31, 2025 to pave the way for policy certainty for both Wall Street and Main Street; Fed may also cut rates from September if Trump’s tariff & trade policy becomes consistent and clear by August 2025.

A Federal Appeals Court allowed Trump to continue enforcing his ‘Liberation Day’ tariffs

A U.S. federal appeals court has upheld President Trump's sweeping "Liberation Day" tariffs, allowing them to remain in effect while it reviews a lower court’s ruling that blocked them. The lower International Trade court had found that Trump exceeded his authority. These tariffs affect most U.S. trading partners, including Canada and China. Although the appeals court has yet to decide whether the tariffs comply with the International Emergency Economic Powers Act (IEEPA), it has temporarily suspended the lower court’s ruling.

On May 28, the US Court of International Trade ruled that only Congress has the power to impose tariffs and that Trump misused IEEPA, a law typically invoked for sanctioning foreign threats. Trump, the first president to use IEEPA for tariffs, justified them as responses to fentanyl trafficking and trade deficits. The lawsuits, filed by small businesses and 12 states, are among at least five legal challenges, none of which have validated Trump’s emergency tariff authority.

The U.S. federal appeals court's decision to uphold President Trump's "Liberation Day" tariffs, pending a review of the lower court’s ruling, allows these broad tariffs on most U.S. trading partners, including Canada and China, to remain in effect temporarily. The lower court, specifically the U.S. Court of International Trade, ruled on May 28, 2025, that Trump exceeded his authority under the International Emergency Economic Powers Act (IEEPA) by imposing tariffs, asserting that only Congress has the power to enact such measures. The IEEPA, typically used for sanctioning foreign threats, was invoked by Trump—the first president to use it for tariffs—to address issues like fentanyl trafficking and trade deficits.

The appeals court's suspension of the lower court’s ruling keeps the tariffs active while it evaluates their compliance with the IEEPA. This development intersects with the recent US-China trade framework agreement from the June 9-10, 2025, London talks, which built on a 90-day tariff truce from Geneva in May 2025. That framework, pending approval from Trump and Chinese President Xi, aims to stabilize tariffs (reducing U.S. tariffs on Chinese goods from 145% to 30% and Chinese tariffs on U.S. goods from 125% to 10%) and address issues like rare earth exports. However, the "Liberation Day" tariffs, which are broader and affect multiple trading partners, could complicate these negotiations, especially as mutual accusations of violating the Geneva deal persist.

The lawsuits challenging the tariffs, brought by small businesses and 12 states, reflect ongoing legal battles, with at least five cases questioning Trump’s emergency tariff authority under the IEEPA. None have yet validated his use of the law for this purpose. The appeals court’s final ruling on the IEEPA’s applicability will be critical, as it could either solidify Trump’s tariff strategy or limit executive power in trade policy, potentially impacting the US-China framework and broader trade relations. For now, the tariffs remain in place, with the August 10, 2025, deadline looming for a more comprehensive US-China trade agreement to avoid further escalation.

Market impact

The overall impact of progress in US-China trade talks is quite limited on Wall Street Futures early Wednesday, June 11, 2025, as there was no real progress for the long-term solution. Further, Trump tariff policies may be now heading for the US Supreme Court, creating more uncertainty for both Wall Street and Main Street. Gold and Silver slips, while oil surged on hopes & hopes of the US-Iran nuclear deal. Silver surged in the last few days after Trump’s 50% metal tariffs followed by the easing of US-China trade tensions, positive for industrial metals.

Technical outlook: DJ-30, NQ-100, Gold and Silver

Looking ahead, whatever the fundamental narrative, technically Dow Future (CMP: 42600) now has to sustain over 42900 for a further rally towards 43200/43600*-44000/45300 in the coming days; otherwise sustaining below 42800, DJ-30 may again fall to 41900/41700-41400/41000* and further 40600/40100-39200/38000 in the coming days.

Similarly, NQ-100 Future (21600) has to sustain over 22000 for a further rally to 22400/22500-22700/23000 in the coming days; otherwise, sustaining below 21900, NQ-100 may again fall to 21900/20900-20700/20200 and 19890/18300-17400/16400in the coming days.

Also, technically Gold (CMP: 3350) has to sustain over 3375-3395 for a further rally to 3405/3425*-3450/3505*, and even 3525/3555 in the coming days; otherwise sustaining below 3365, Gold may again fall to 3340/3320-3300/3280 and 3255/3225-3200/3165* and further to 3130/3115*-3075/3015-2990/2975-2960*/2900* and 2800/2750 in the coming days.

Also, technically Silver (CMP: 36.50) has to sustain over 38.00 for a further rally to 40.00/45.00-49.00/50.00 in the coming days; otherwise sustaining below 37.00, Silver may again fall to 36.00/34.50-32.00/31.50 and 31.00-30.50 in the coming days.