With US President Donald Trump and China’s Xi Jinping close to signing a trade deal, the potential impact on the global economy will be modest but positive, analysts have said.
Trade negotiators for the US and China said they have agreed the terms on contentious points, after the two leaders met in South Korea on Thursday. A deal would ease trade tensions that have rattled global markets this year.
“From a macro perspective, this is a modest but positive story for the global economy,” Ahmad Assiri, research strategist at trading platform Pepperstone told The National.
“More trade means a bit more breathing room for export heavy economies especially in Asia. It also helps restore confidence in global supply flow that have been strained by tariff ping-pong this year.”
As part of the deal, tariffs on Chinese imports will be cut to 47 per cent, from 57 per cent, by halving the rate of tariffs related to trade in fentanyl precursor drugs to 10 per cent, a Reuters report found.
China also agreed to pause export controls announced this month on rare earths, elements that are vital for several sectors including manufacturing and weapons. China will also resume soybean imports from the US, the report said.
Stock markets and commodity prices, including oil, took a hit from Mr Trump's tariffs announcements this year. The resulting uncertainty around trade disruption also raised prospects of inflation rising.
The International Monetary Fund this month raised its global economic growth forecast for this year but flagged risks including uncertainty related to trade tariffs impacting growth.
The fund projects global output to grow by 3.2 per cent in 2025 – up from its July forecast of 3 per cent – and 3.1 per cent in 2026, unchanged from its previous estimate.
“Equities tend to love these moments of less bad news though the good news have been mostly priced in,” Mr Assiri said.
“On the commodity side, soybeans are the obvious winner if Beijing follows through and energy and base metals could firm up if traders believe this thaw supports global growth.”
Commodity prices set to drop
Gold prices, which rose early on Thursday following the news, later revered gains and was down 0.35 per cent to $3,972 an ounce at 4.51pm UAE time.
“Gold rose … after four sessions of losses, as investors digested comments from President Trump following his meeting with President Xi,” said Soojin Kim, research analyst at MUFG Bank.
“The talks produced a limited trade deal, including halved fentanyl tariffs and the resumption of soybean imports, easing tensions between the world’s two largest economies but falling shorts of a full agreement.”
On the commodities front, Brent and West Texas Intermediate were trading lower on Thursday on concerns of rising production from Opec+ members, despite easing of trade tensions.
Brent, the global benchmark for crude oil, was down 0.99 per cent at $64.28 per barrel at 4.42pm, while WTI, the US gauge for crude, was trading 0.96 per cent lower at $59.91 per barrel.
Looking ahead, global commodity prices are projected to fall to their lowest level in six years in 2026, marking the fourth consecutive year of decline, according to the World Bank Group’s latest Commodity Markets Outlook.
Prices are forecast to drop by 7 per cent in 2025 and 2026, driven by weak global economic growth, a growing oil surplus, and persistent policy uncertainty.
"The global oil glut has expanded significantly in 2025 and is expected to rise next year to 65 per cent above the most recent high, in 2020," the report said.
"Oil demand is growing more slowly as demand for electric and hybrid vehicles grows and oil consumption stagnates in China."
Brent crude oil prices are forecast to fall from an average of $68 in 2025 to $60 in 2026 – a five-year low, the World Bank said.
