What Donald Trump calls “excellent” on Truth Social is difficult to translate into economic terms with the same tone. The new deal with China, which the president claims is concluded – pending final approval by Xi Jinping – undoubtedly brings short-term benefits, but also a wide range of strategic risks. A pact between two superpowers that sounds like a handshake between businessmen – without reliable multilateral safeguards, without parliamentary involvement, without long-term calculability. According to Trump, China will deliver “full magnets” and all necessary rare earths up front. These materials are essential to the U.S. economy – in semiconductors, wind turbines, electric vehicles, missile systems, smartphones. Ensuring their supply is of vital importance to U.S. industry, especially in times of global friction. That China is willing to deliver these strategic resources up front can be seen as a political coup. But how reliable is a deal tailored to two individuals and built primarily on announcements?
In return, Chinese students are to be granted renewed access to U.S. universities – a point welcomed by some in the business world, but viewed by parts of the Republican base as a form of “capitulation.” Here too, it remains unclear whether this is a controlled reopening or merely a symbolic concession. Universities, particularly in STEM fields, could benefit – if issues of visas, funding, and political interference are not thrown back into question. The greatest point of friction, however, lies in the tariffs. According to Trump, the U.S. will impose 55 percent tariffs on certain Chinese imports – while China imposes only 10 percent. At first glance, this may appear to be an asymmetric triumph, but economically it threatens to become a massive burden for U.S. consumers and businesses. Import-heavy companies will face significantly higher costs. Small and medium-sized businesses that rely heavily on components from China may either lose their margins or raise prices – which would, in turn, fuel inflation. Especially affected would be the consumer goods sector, electrical engineering, manufacturing, and mechanical engineering. In an already strained pricing environment, the deal risks becoming an economic boomerang.
The stock market has so far responded with restraint. While certain commodity companies have posted gains – driven by the prospect of privileged access to rare earths – the broader market remains skeptical. The Dow Jones remained largely flat after the announcement, and tech stocks were partially in the red. Investors are right to ask: how robust is an agreement that is backed by neither an institutional framework nor concrete trade mechanisms? What happens if the tone between Beijing and Washington once again intensifies – or if a trade war reignites after all? For Trump, the deal is a political narrative. He stages himself as the dealmaker who forces concessions from China while asserting American interests. But for the real economy, much remains unclear: are these tariffs permanent? Will they be adjusted by sector? Which products are included, which are exempt? Will there be exceptions for high-tech goods or medical supplies?
So far, China has responded with cautious silence. That alone shows this is not a multilateral agreement but a bilateral maneuver centered around maximum self-staging. The price could be high – for consumers, companies, and the credibility of reliable trade policy. What sounds like strength on Truth Social is economically a high-wire act. And initial strength does not always ensure lasting stability. The fairy tale of the perfect deal may be appealing – but the economy demands more than headlines. It demands substance.
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