Trump And Xi Found A Trade Truce—But Wall Street Wanted More

Markets barely flinched after President Donald Trump's high-profile meeting with Chinese leader Xi Jinping in South Korea, as investors found little substance in the much-hyped U.S.-China trade truce that largely echoed prior leaks and delivered few surprises.

A cocktail of mixed earnings, hawkish remarks from Fed Chair Jerome Powell, and a less-than-exceptional Trump-Xi meeting dragged tech and global markets lower on Thursday.

The Invesco QQQ Trust (NASDAQ:QQQ) dropped 1%, led by a sharp 10% plunge in Meta Platforms Inc. (NASDAQ:META) after the company revealed a surprise surge in AI-related capital spending.

China-exposed stocks weren't spared either. The Invesco China Technology ETF (NYSE:CQQQ) fell 1.9%, while the iShares China Large-Cap ETF (NYSE:FXI) slipped 1.7%, as investors questioned the real impact of the U.S.-China trade truce.

Chinese tech ADRs trading in New York were all in the red, with Alibaba Group Holding Ltd. (NYSE:BABA) falling 2.77%, PDD Holdings Inc. (NASDAQ:PDD) down 1.34%, JD.com Inc. (NASDAQ:JD) sliding 2.43%, Baidu Inc. (NYSE:BIDU) losing 3.71% and Li Auto Inc. (NASDAQ:LI) dropping 2%.

Trump Gave China Tariff Relief—Investors Are Wondering What He Got Back

Despite headline-worthy gestures, including mutual tariff reductions and suspended rare earth controls, investors viewed the Trump-Xi outcome as symbolic rather than strategic.

Michael Hirson, analyst at 22V Research, said the deal reflected a "major climbdown" by Trump. The president suspended the so-called "50% rule" on Chinese exports and agreed to slash fentanyl-related tariffs by half.

China, in return, paused its export controls on rare earths and promised to buy more U.S. agricultural goods like soybeans and sorghum.

While the tone suggested de-escalation, the markets read between the lines: the two leaders avoided discussing semiconductors, Taiwan and TikTok ownership—hot-button issues that could reignite friction in months.

"Today's agreement appears to be a ‘win' for both sides," said Roman Ziruk, senior analyst at Ebury, "but a flare-up in tensions down the road is not out of the question."

Nvidia And Chips: The Critical Issue Was Missing

Notably absent from the Trump-Xi agenda was the elephant in the room: Nvidia Corp. (NASDAQ:NVDA) and the thorny issue of advanced chip sales to China.

Trump avoided direct mention of the B30A chip—designed specifically for the Chinese market—but his openness to allowing sales has already sparked backlash.

The tech war is not cooling, even if tariffs are. Beijing's dependence on U.S. chips remains acute, while Washington faces pressure from domestic hawks to tighten controls.

Louise Loo, head of Asia economics at Oxford Economics, warned the détente is "fragile" and “highly sensitive to perceived escalations.”

"Recent history suggests the risk of policy miscalculation and misunderstanding is high," she said, adding that "China's leverage in rare earths and critical minerals will continue to surface episodically, effectively capping any escalation in bilateral tensions."

She warned that "the four Ts"—Taiwan, transshipments, TikTok and technology—remain unresolved, making the peace more of a pause than a pivot.

Short-Term Stability, Long-Term Uncertainty

While both sides may enjoy a temporary reprieve, structural tensions remain unresolved. Trump is expected to visit China in April 2026, but his delay from early Q1 signals there may not be much more on the table in the short run.

"The worst of the trade war appears to be behind us," said Ziruk, "but the relationship will need to be managed carefully."

Markets seem to agree: the calm may be temporary, and investors aren't rushing to price in peace just yet.

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