What began as Trump’s Liberation Day may end as China’s says strategist

Investing.com -- What began as Trump’s Liberation Day may end as China’s, according to Kepler Cheuvreux strategist Arnaud Girod, who argues that the global balance of power is shifting as Beijing mirrors Washington’s “maximum pressure” tactics and uses its control over key resources to redefine the geopolitical game.

Girod writes that “it increasingly feels like Trump’s 2 April Liberation Day will be remembered instead as China’s own Liberation Day on the global stage.”

He draws a direct link between the U.S. president’s aggressive trade posture and China’s assertive counterstrategy, noting that Beijing “has been preparing for Trump 2.0” and now “responds to every American offensive with punches that land just as hard.”

At the center of this standoff lies China’s dominance over the global supply of rare earths—materials crucial to modern technology and defense manufacturing. By imposing new export license requirements and tightening control over magnet production, Beijing has turned what was once a vulnerability into a potent tool of leverage.

Girod suggests this move is part of a broader playbook that copies Trump’s own Art of the Deal approach: high-stakes pressure and hard bargaining.

The stakes extend far beyond trade. Kepler highlights that geopolitics now shape markets through multiple channels—energy prices, supply chain disruptions, and consumer sentiment driven by inflation and savings behavior.

The Paris-based research firm notes that U.S. sanctions on Russian oil firms, due to take effect in late November, are already prompting Indian and Chinese refiners to scale back Russian crude purchases.

If these trends continue, Girod says, “this latest move may increase the chance of a ceasefire,” which would be positive for European markets, particularly banks, autos, and construction stocks.

Xi-Trump meeting seen as ’pivotal’

The upcoming Trump–Xi meeting in South Korea could mark the next pivotal moment. Kepler expects the two leaders to discuss an extension of the current tariff truce and potential delays to further rare earth measures.

While this could provide short-term relief, Girod cautions that “markets haven’t really been affected by the latest escalation,” suggesting sentiment will remain anchored by the stronger AI-driven investment narrative.

Still, Kepler sees a “big bargaining” phase emerging in 2026, as both sides face narrowing windows of leverage. The U.S. retains control over dollar flows and aerospace technology, but China is accelerating its military buildup and dedollarization efforts. Over time, Girod argues, Beijing’s relative strength may rise, reinforcing its ability to dictate terms.

Despite heightened political tension, equity markets have shown notable resilience. Investors have focused on artificial intelligence and restructuring plays among undervalued consumer names, while earnings season has been broadly reassuring.

Girod concludes that if geopolitical conditions improve—especially through progress on Ukraine or easing in U.S.–China tensions—European equities could see renewed upside.

In Kepler’s view, Trump’s “Liberation Day” may yet symbolize a reversal of influence—one in which Beijing turns Washington’s strategy into its own moment of liberation.