The weekend began with a thunderbolt in global trade dynamics. Although markets remained closed on Saturday, Friday late-night developments have reshaped the geopolitical and economic narrative—perhaps permanently.

The most shocking revelation is the signing of a trade deal framework between the United States and China. Long embroiled in tariff wars and economic hostilities, these two global powers have now taken a step toward potential reconciliation—a possibility that seemed highly improbable until just a few days ago.

In stark contrast, the U.S. has suspended all trade talks with Canada, citing disagreement over the imposition of a retroactive Digital Services Tax (DST). Here’s a detailed breakdown of all the major updates from the last 24 hours:

1. U.S.-China: Trade Deal Framework Signed

For years, the U.S. and China were at each other’s throats—slapping tariffs, restricting exports, and targeting tech companies in tit-for-tat economic warfare. However, a trade framework agreement has now been signed by both nations, paving the way for a full trade deal.

A “framework” refers to a preliminary agreement that outlines core principles, terms, and conditions, leading up to a formal trade agreement. It’s not the final deal but a significant milestone toward one.

2. What Does the Trade Framework Include?

a. Rare Earth Mineral Exports

The U.S. is heavily dependent on China for rare earth minerals—essential for defense, electronics, semiconductors, and automotive industries. China had earlier restricted their export, crippling global supply chains.

The new framework includes a provision where China will speed up rare earth shipments. The White House confirmed that an agreement has been reached on this point.

b. Tariff Removal and Equal Treatment

China raised concerns about being singled out for higher tariffs, often exceeding 150%–250%, while other countries received exemptions. The Chinese delegation insisted on being treated like a “normal country.”

China's demand: Either remove all excessive tariffs or apply them equally across all countries, not specifically on China.

c. Business Freedom for Companies

Both countries complained about how their companies are treated unfairly in the other's territory.

U.S. Companies in China: Faced delays, licensing issues, and bureaucratic red tape.

Chinese Companies in the U.S.: Faced restrictions, IPO denials, and delisting threats.

The framework commits to easing these frictions, allowing fairer and freer operation of businesses in each other’s markets.

d. Ending Mutual Economic Damage

Much of the trade war was driven by retaliatory actions. The new framework seeks to unwind this pattern, aiming to remove damages both sides have inflicted over the past six months.

Each side has laid out a wish list for things they want removed—from export bans to tariff hikes and regulatory restrictions.

3. Why Did the U.S. Agree to Soften Its Stance?

The answer is simple: rare earth elements. The U.S. cannot afford to let China block the supply of these critical minerals.

Almost every modern industry—military, tech, EVs, renewable energy—requires rare earth components. A prolonged shortage would cripple entire sectors of the American economy.

This vulnerability forced the U.S. to reconsider its aggressive stance and enter negotiations despite prior hostilities.

4. Why Did China Agree to Come to the Table?

China’s shift is also strategic:

Domestic Economic Slowdown: China’s economy is showing signs of strain, especially post-pandemic and amid global diversification away from Chinese manufacturing.

India's Rising Role: India is increasingly seen as a global manufacturing alternative. China does not want to lose its edge, especially if the U.S. decides to pivot toward India.

To prevent geopolitical isolation and economic substitution, China is choosing diplomacy over conflict—for now.

5. Market Reactions

The American stock market responded almost instantly. On Friday night, U.S. indices surged nearly 1%, with futures pointing to continued gains. Investors saw the framework as a potential end to the damaging trade war, sparking optimism.

However, volatility remains high, and caution is warranted—especially with Trump’s unpredictable nature and the possibility of a sudden U-turn.

6. U.S. Breaks Trade Talks With Canada Over Digital Services Tax (DST)

In a stunning parallel development, President Trump declared that the U.S. will no longer negotiate any trade deal with Canada.

Reason:Canada imposed a 3% DST on U.S.-based tech giants, including:

Google (Alphabet)

Facebook, Instagram, WhatsApp (Meta)

Apple

Microsoft

X (formerly Twitter)

Worse, this DST is retroactive to 2022, requiring companies to pay back taxes on previous earnings. The U.S. strongly opposes this tax and sees it as unfair targeting of American firms.

Until the DST is revoked, the U.S.-Canada trade relationship will remain frozen.

7. The Bigger Picture: Trump’s Trade Strategy

This week’s developments paint a picture of Trump’s evolving—and often contradictory—trade strategy:

Willing to make concessions with adversaries like China for strategic needs (rare earths).

Simultaneously, cutting ties with traditional allies like Canada over financial grievances.

This dual approach is consistent with Trump’s past behavior: pragmatic yet volatile, unpredictable but strategic.

8. What to Expect Going Forward

As the U.S. moves toward its July 9 Tariffs deadlines, expect more surprises. Trade negotiations with other countries are underway, and anything—from new tariff announcements to major deals—can break at any moment.

The U.S.-China trade deal framework is a hopeful sign, but nothing is guaranteed. Both countries remain unpredictable and fragile in their commitments. If one side feels slighted, tensions could resurface instantly.

Disclaimer:This blog post is intended for informational purposes only. The content is based on publicly available reports and statements and should not be considered as financial, legal, or political advice. Readers are encouraged to verify all facts and consult with relevant professionals before making any decisions based on this content. The views expressed do not reflect the official stance of any government or institution.