US-China deal offers relief, not resolution, for global investors

The newly announced trade agreement between the United States and China offers temporary relief from economic tensions, but it does not resolve the deep strategic rift between the world’s two largest economies.

For investors, I believe, this is a short-term fix within a long-term rivalry, and portfolios must be positioned accordingly.

President Donald Trump’s statement that a deal is “done” follows two days of talks in London. The agreement grants the US access to China’s rare earth supplies—crucial for technologies such as electric vehicles, AI hardware, and clean energy infrastructure—and allows Chinese students to resume academic programs in American universities.

These are valuable tactical steps, but they don’t alter the fundamental dynamics of the relationship.

Despite the optics, this is not a breakthrough. It is a limited détente that restores parts of the status quo that existed before tensions escalated in April. Core barriers remain in place, tariffs are still elevated, and export restrictions have not been meaningfully eased.

Washington continues to block the transfer of advanced chips and semiconductor manufacturing equipment to Chinese firms. Beijing, in turn, retains its controls on critical mineral exports and has gained no concessions on auto trade or technology access.

What’s emerged is a narrow deal that skirts the real issues: national security-driven economic policy, supply chain sovereignty, and long-term technological supremacy.

Neither country has deviated from its strategic course. The US is forging ahead with reshoring initiatives, stricter investment screening, and targeted industrial subsidies. China is accelerating domestic substitution, bolstering financial insulation, and pushing regional integration through its Belt and Road initiative and the expansion of the digital yuan.

Two distinct economic systems are taking shape. One revolves around the US and its allies, the other around China and its partners. This deal doesn’t halt that divergence—it simply slows the pace of public confrontation.

Investors must be alert to what this means in practice.

First, resist the temptation to interpret diplomatic progress as economic resolution. While this agreement may ease some bilateral friction, it leaves the overarching trajectory of decoupling untouched. Investors should not assume that sectors sensitive to geopolitical risk—especially technology, semiconductors, and energy—are any less exposed than they were a month ago.

Second, increase geographical diversification. Relying heavily on one region or trade bloc is increasingly risky in a world where policy decisions are being driven by strategic alignment as much as by economic rationale. Exposure to multiple markets, not just across developed and emerging economies, but across different regulatory and geopolitical frameworks, is now a necessity, not a luxury.

Third, seek companies that are actively building multi-country supply chains. Firms expanding into Southeast Asia, Mexico, and Eastern Europe are preparing for the next phase of trade fragmentation. Investors should prioritise businesses demonstrating adaptability and resilience over those optimised purely for cost efficiency.

Fourth, identify sectors set to benefit from government-supported self-reliance efforts. These include domestic manufacturing, clean energy, cybersecurity, and digital infrastructure. Both the US and China are deploying substantial public capital into these areas, and investment opportunities will follow.

Fifth, be cautious around industries reliant on predictable global rules. The WTO framework that governed decades of expansion in global trade is being steadily eroded. Where once investors could count on relatively open and rules-based flows of goods and services, they must now contend with shifting export controls, sanctions, and sudden regulatory interventions.

Sixth, monitor the development of parallel financial systems. The coming divide may be less about products and more about money itself. Competing digital currencies, payment infrastructure, and capital controls are likely to feature more prominently. This financial bifurcation could have serious implications for cross-border investment flows, corporate funding, and monetary policy transmission.

Investors should also be prepared for policy reversals. One of the defining characteristics of this era is that agreements are made with one hand and suspended with the other.

Executive discretion in trade, tech, and security matters has expanded. Deals can be signed, then shelved, with minimal warning. Stability is no longer the default setting.

This doesn’t mean abandoning international investment. On the contrary, it means rethinking how to do it. The old model of betting on ever-deepening global integration is gone.

What comes next is a world of selective engagement; one where investors must evaluate not only business models and earnings forecasts, but also geopolitical alignment and supply chain security.

We’re living through a reordering of the global economy. This agreement, modest as it is, fits into a broader pattern: occasional truces, punctuated by strategic divergence. Investors who adapt their approach now—diversifying intelligently, backing resilient enterprises, and anticipating future decoupling—will be in a stronger position to weather the volatility and capitalise on emerging opportunities.

The US-China rivalry is not a story of one-off negotiations. It is a structural transformation with far-reaching consequences. This deal changes the tone, not the substance.

For long-term investors, the challenge is to move beyond short-term noise and position for the future we are actually heading towards: one of competing economic blocs, disrupted trade flows, and heightened sensitivity to national interest.