Two Months. That Is All Xi Got.
The readout landed last night. Trump and Xi extended the trade truce by two months, to January 10. No tariff cuts. No firm commitments on rare earths. No chips deal. U.S. officials told reporters that Chinese rare earth deliveries are still falling short of what Beijing promised at Busan. Taiwan and Iran were discussed without resolution. Two more summits, in Shenzhen and Miami, are penciled in before year-end.
Wednesday I told you a truce is a countdown. China set the timer at sixty days.
Think about what that number means. A one-year extension would have told you Beijing was comfortable, that it believed the relationship was stable enough to put the weapon down for a while. Sixty days says the opposite. Xi wants Washington back at the table before the new Congress is seated, with the export licenses still throttled, the deliveries still short, and the deadline landing nine days into a new year. That is a man who knows his leverage is worth more when it is renewed often.
And here is the part almost nobody in the coverage is saying. Washington has been playing the same game, on a bigger board, all year.
Step back to January 3. U.S. forces captured Nicolás Maduro in Caracas, and within days Washington announced it would take control of Venezuelan oil sales and hold the revenue in U.S. Treasury accounts. China had been buying roughly 80% of Venezuela’s crude exports, about 400,000 barrels a day, most of it disguised as Brazilian or Malaysian cargo to get around sanctions. After January 3, those shipments stopped. Chinese cargoes were returned or diverted.
Seven weeks later, the war with Iran began. Before the conflict, China was buying roughly 90% of Iran’s oil exports, which supplied about 13% of everything China imports. Between Iran and Venezuela, close to a fifth of China’s crude came from two countries that Washington has now effectively taken off the board.
Put simply, in the same year Beijing has been using rare earths to squeeze Washington, Washington has been using oil to squeeze Beijing. Two of China’s three discounted-crude lifelines are gone. The small independent refiners that make up a quarter of China’s refining capacity were built on those discounts, and their pricing model is broken. Beijing can replace the volumes from Saudi Arabia, Iraq, and Russia. It cannot replace the price, and it cannot replace the political relationships that came with the barrels.
And Washington now has a unit whose whole job is making sure this keeps happening.
In April, Deputy Secretary of War Steve Feinberg, the co-founder of Cerberus Capital who left Wall Street to take the job, formally chartered the Economic Defense Unit inside the Department of War. Its mandate is to bring economic leverage into the department’s planning: identify the strategic assets and critical mineral supplies the U.S. cannot afford to source from China, and secure them, whether that means equity stakes, offtake agreements, price floors, or long-term financing. Its director reports to Feinberg as his principal advisor for economic competition. The Hill called it “the tip of the spear” of a “war cabinet for economic conflict.” Bloomberg’s August headline was blunter: “Trump Turns to Economic Warfare, With China in Crosshairs.”
Put the EDU alongside the rest of the machinery and the year comes into focus. The Office of Strategic Capital writes 25-year loans to mines in allied countries. The Export-Import Bank finances the $10 billion Project Vault stockpile that Glencore joined this week. The Department of War takes equity in producers like MP Materials and sets price floors. Treasury holds Venezuelan oil revenue. By the Council on Foreign Relations’ count, the federal government put $10 billion into critical minerals between January 2025 and June of this year, before Vault, Greenland, or the scandium loan. Every one of those agencies is doing something it did not do five years ago, and every one of them is doing it to make sure that the next time Beijing throttles an export license, it does not matter.
Venezuela and Iran fit the same picture from the other side. Neither operation was about minerals. Both removed a supplier China depended on and put the revenue or the shipping lane under American control. Whether that was the primary objective or a welcome side effect, the result is the same: Beijing lost a fifth of its discounted crude in a single quarter, and Washington gained leverage it did not have in January.
This is what gray zone warfare looks like when both sides are fighting it. China does not need to fire a shot to hurt American factories; it needs an export license bureaucracy. Washington does not need to declare war on China to hurt Chinese refiners; it needs to change who runs Venezuela and who controls Hormuz. Neither side calls it a war. Both sides are fighting one, with supply chains, financing, and chokepoints as the weapons, and both now have dedicated offices running it.
Now put the two-month truce in that frame.
Beijing set a short clock because it wants to keep pressure on Washington. Washington accepted a short clock because it does not need a long one. Every week the truce holds is a week the U.S. keeps building: the Greenland deal, the scandium mine, the tungsten line, the stockpile, the refineries. Every week the Venezuelan and Iranian oil stays off China’s books is a week Beijing’s refiners pay more. Both sides are using the truce to reload. The difference is that Washington’s reloading is permanent. A mine, once built, does not un-build when the truce expires. An oil relationship, once severed, does not restore itself because a summit went well.
So here is what I expect over the next sixty days.
The pace of deals is going to pick up. Every incentive Washington has points the same way: a January 10 deadline that rewards positions taken now and punishes positions taken later, a midterm election in five weeks that rewards announcements, and a set of agencies, the Economic Defense Unit, the Office of Strategic Capital, the Export-Import Bank, that were built to move money quickly and now have a reason to. In the last ten days alone the government locked up Greenland, banned tungsten scrap exports, cleared Korean tungsten shipments, and brought the largest commodity trader on earth into a $10 billion stockpile. That is the pace with the truce expiring in November. With it expiring in January and an election in between, I expect it to accelerate: more equity stakes, more offtake agreements, more loans to mines in allied countries, more price floors, and at least one more security arrangement on the Greenland model.
The companies on the receiving end of that spending are known. They are the ones with a loan, a permit, or a customer already in hand, because the government does not have time to build from scratch in sixty days. It funds what is ready.
That is the reading that matters for your money.
January 10 is now the next risk event for every stock in the critical minerals space. The speculative names that doubled last week on Greenland have a shorter runway before the next scare. The funded producers have two months of calm to pour concrete, a deadline that makes their supply more valuable the closer it gets, and a government I expect to be writing checks the entire time. The energy exporters inside safe borders have a China that needs replacement barrels and a Gulf that cannot reliably provide them. And the companies the Economic Defense Unit and its sister agencies are funding have a government that just told the world, by accepting a sixty-day truce without blinking, that it is not in a hurry to settle.
Xi came to Washington holding the only card that matters. Washington let him keep it for sixty more days, because it is busy building a deck of its own.
The policy moves I just outlined share a common thread. Washington is prepared to spend whatever it takes to secure energy and critical mineral supply chains, and that kind of spending is inflationary. Investors who position for it early stand to do very well.
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Best Regards,
Graham Summers, MBA
Chief Market Strategist
Phoenix Capital Research