The United States and China appear to have hammered out the framework of a trade deal in advance of Presidents Donald Trump and Xi Jinping\'s meeting this week, removing the threat of an imminent collapse in trade between the world\'s two largest economies. World markets have welcomed the news, but, far from a game changer, this just looks like hallucination.

\" OUR DEAL WITH CHINA IS DONE, SUBJECT TO FINAL APPROVAL WITH PRESIDENT XI AND ME,\" Trump wrote on Truth Social on June 11, adding: \"RELATIONSHIP IS EXCELLENT!\"

Earlier this month Beijing put extra controls on rare earth exports, and Washington responded with threats of 100% tariffs on U.S.-bound shipments of goods from China. U.S. Treasury Secretary Scott Bessent also publicly criticized top Chinese trade negotiator Li Chenggang as \"unhinged\".

As it turned out, the deal was not done, and the relationship was not excellent. While White House remain upbeat,  the Chinese side is taking a more cautious line.

Any deal that removes the worst-case scenario of a collapse in U.S.-China trade is good news, if the doomsday 2threat is sidelined, the world economy will continue to muddle through, and markets will melt up on policy stimulus, AI optimism and solid corporate earnings in the geopolitics and global trade. Regardless of how the Trump-Xi meeting goes. The stakes are high, neither side wants to be seen backing down, and both will feel they hold the ace cards.

One of the big takeaways from the International Monetary Fund and World Bank annual meetings in Washington this month was that China\'s decision to use its rare earth leverage over the U.S. signals a new and more dangerous stage in this geopolitical struggle. something more monumental between the two countries is playing out.