U.S.-China Trade Hopes Rise, but Macquarie Warns Real Deal Still Out of Reach

Optimism over a potential U.S.-China trade breakthrough surged after weekend reports hinted at a new framework agreement, but analysts at Macquarie caution that hopes for a game-changing deal remain premature. The proposed framework, discussed on the sidelines of the ASEAN Summit, is expected to be reviewed by President Donald Trump and President Xi Jinping later this week in South Korea. Despite the buzz, Macquarie says the talks are more about delaying escalation than solving deep-rooted disputes between Washington and Beijing.

According to Macquarie’s recent report, a “comprehensive agreement” addressing long-standing strategic tensions — such as trade imbalances, technology transfer, and Taiwan — is unlikely to be achieved soon. While U.S. officials including Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer called the framework “constructive,” Beijing described it only as a “preliminary consensus.” The tentative understanding pauses new U.S. tariffs and gives China another year before restrictions tighten on rare earth minerals, a critical resource for electronics and defense industries.

Markets reacted positively, with the S&P 500 hitting record highs amid optimism that a trade deal could materialize. However, Macquarie believes that much of this enthusiasm is already priced in. The firm noted that with U.S. tariffs still at 30% on Chinese imports, the likelihood of a sweeping trade accord remains distant.

Both sides continue to clash over key issues — from TikTok and fentanyl controls to Taiwan — that have repeatedly derailed past negotiations, including the 2019 “Phase One” deal. Macquarie warns that until tangible concessions are made by both Washington and Beijing, investors should remain cautious. “We expect the enthusiasm to fade,” the firm concluded, signaling that a true breakthrough may still be far from reality.