May 22, 2026
Between tariffs, political posturing and the war in Iran, the relationship between the US and China is a tense one these days. And that uncertainty can add a layer of volatility to the markets, which impacts both investment and retirement accounts.
Rival nations don’t have to resolve all of their differences to work together. In the Cold War, for instance, the Soviet Union was still a customer of US wheat and corn — and US companies laid the groundwork to open locations in the country. So, the recent summit between leaders of the US and China, while it failed to yield many confirmed deals, was an important step in ending some of the uncertainty of recent years.
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JPMorgan (NYSE: JPM), in a note to investors, said it saw five forces that could reshape the equilibrium between the two countries. And that, in turn, could lead to everything from lower retail prices to increased optimism on Wall Street.
A damaged relationship, but not an absent one
While the trade link between the countries has weakened, it hasn’t vanished, the bank said. China is still a country that’s dependent on trade. It’s simply less dependent on the US than it used to be. US imports from China hit lower points last year than during the pandemic and are expected to drop even further this year.
“Decoupling is occurring, but there is likely significant trade rerouting through other markets,” the bank wrote.
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Parallel chokepoints
Leverage is something the US and China are both fighting for, with tariffs the most visible of the pressure points. The US, though, can also utilize semiconductor exports and investment restrictions to help its cause. Rare-earth supplies are just as important, though, and the advantage there goes to China, which accounts for roughly 70% of rare-earth mining, 90% of separation and processing and 93% of magnet manufacturing
“The chokepoints now run both ways,” JPMorgan wrote. “Both sides now know the pressure points. The goal is to manage them before they become shocks.”
Taiwan
Perhaps the most central issue between the two countries, this is the crisis both sides want to avoid. “One estimate suggests a Taiwan blockade could reduce U.S. gross domestic product (GDP) by 5% and China’s GDP by 9%,” the bank wrote.
That’s a potential disruption that makes the situation in Iran look small.
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A global relationship
China’s Belt and Road Initiative, a global infrastructure and economic development strategy designed to help China and its partner countries share and trade things, spans roughly 150 countries, meaning any tensions are not just confined to the US and China. But if those two countries can restore the equilibrium between them, it could benefit many other nations as well, making it easier to manage costs.
Dialogue could be the start of stabilization
A key question is whether the just-concluded summit was a one-off event or the start of a longer series of talks between the countries. If so, that reduces the risk of economic disputes becoming something broader, which should calm markets.
“It’s less about the dialogue and more about whether future engagement produces mechanisms to help manage disputes on things like trade and investment channels, purchase commitments, artificial intelligence (AI) dialogue, tariff language and working-level forum,” JPMorgan wrote. “Dialogue does not mean a reset, but rather a test of whether the world’s two largest economies can make a fragile relationship more predictable.”
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Chris Morris is a veteran journalist with more than 35 years of experience at many of the internet's biggest news outlets. In addition to his activities as a writer, reporter and editor, Chris is also a frequent panel moderator and speaker at major conferences, including CES and South by Southwest.
