Hello from Copenhagen.

Oil and precious metals are on the move again as the US-China trade deal—still wrapped in conditions—offers leeway for the world’s largest commodity importer to increase future purchases and bolster growth through upcoming stimulus packages aimed at reviving manufacturing and domestic consumption.

The deal itself doesn’t contain much. Tariff levels remain unchanged: effectively 55% against China (base tariff + fentanyl tariff + reciprocal tariff of 30%) and 10% against the US, exactly as negotiated a couple of weeks ago. So if tariffs didn’t change, why did it drag out? US officials projected swift, result-bearing negotiations, expecting an announcement by Monday afternoon. Instead, the deal landed overnight, suggesting that one party brought more to the table than expected.

Looking at the contents of the agreement, China will lift its export ban on rare earth metals and magnets—used in the production of jets, chips, cars, and other tech products—for six months. In return, the US will allow Chinese students to enroll at American universities. It seems like a much better deal for the US than for China, but it likely signals that both sides just wanted to get something done. Lutnick has already said they’re moving on to other deals, adding that “Europe will probably be at the very, very end,” confirming our suspicions that US-EU disputes are still far from resolved.

The deal now allows the US to proceed with fiscal spending aimed at the defense, automotive, and manufacturing sectors—as well as chip production—where lifting the export ban was a necessary condition. It’s worth remembering that China controls a large share of the world’s reserves of rare earth metals and minerals, and has previously restricted exports of germanium and gallium (key for semiconductors). Until now, rare earth minerals and magnets—of which China controls 90% of global production—had also been limited.

Since US companies will likely need access to these reserves to scale up production in both manufacturing and semiconductors, the export ban was probably the main sticking point for US negotiators.

Chart 1a: US imports a lot of critical metals from China