It finally happened…
After months of tariff ratcheting, headline bluffing, and economic saber-rattling, the U.S. and China just announced a 90-day pause in their escalating trade war—and the implications are massive.
From Stalemate to Soft Reset
Tariffs are coming down. Fast.
By Wednesday, U.S. tariffs on Chinese goods will fall from a punishing 145% to 30%. On the other side, China is cutting retaliatory duties from 125% to just 10%.
That’s a 115-point swing on both ends of the trade ledger. In policy terms, that’s a ceasefire. In market terms? It’s a green light.
Futures surged in pre-market trading, with a clear risk-on tone across equities, crypto, and cyclicals.
Treasury Secretary Scott Bessent called the meetings “constructive” and “substantive.” He even hinted that the 90-day tariff pause could be extended if negotiations remain productive.
“Neither side wants a decoupling,” Bessent said. That sentence alone was worth 100 S&P points.
This is a dramatic turn from the tone just a week ago, when Trump flatly rejected talks unless China caved first. But by Saturday, he was praising the Swiss talks and posting, “a very good meeting today with China… negotiated in a friendly, but constructive, manner.”
Translation: the White House wants momentum, and it just got it.
A New Playbook in Motion
The agreement, while temporary, reflects a new structure: alternating rounds of talks between China and the U.S. in the coming weeks.
The joint statement mentioned the creation of a mechanism for continued dialogue on trade, tech, agriculture, semiconductors, steel, currency manipulation—and even fentanyl. Yes, fentanyl made the agenda, with China sending a deputy minister to address it directly.
If you were looking for a sign that the two sides are serious, this is it.
Bessent’s media blitz reinforced the message. On CNBC, Bloomberg, and MSNBC, he struck a consistent tone: talks will continue, some tariffs are here to stay (especially on “strategic sectors” like EVs and steel), but the path toward a more “fulsome agreement” is open.
Even more important? He floated the possibility of a Trump-Xi call in the coming weeks.
We’re watching the start of what could be a restructured U.S.–China economic relationship, just as AI, energy demand, and global infrastructure all start pulling capital into the same sectors.
And that means…
🚨 Market Opportunity: Trade De-escalation = Selective Breakout Potential
While the 90-day tariff pause is temporary, the capital response might not be.
1. Multinational Industrial ExportersWith tariff relief on the table, exporters with heavy exposure to China could reprice fast. Look at high-margin industrial names with established China pipelines—think Honeywell (HON), Illinois Tool Works (ITW), or even select chip-equipment suppliers like KLA Corp (KLAC).
Playbook: Focus on names that got crushed in the trade war and haven’t fully recovered. A sustained reduction in tariffs could unlock pricing power and margin expansion.
2. Strategic Sector Moats (Tariff-Protected Winners)Don’t forget: tariffs aren’t gone, they’re redirected toward protectionist strategy.
U.S. policy is still defending key verticals—steel, energy, semiconductors, defense manufacturing. Companies in these spaces (like Nucor [NUE], Micron [MU], or HII [Huntington Ingalls]) are in the driver’s seat.
Playbook: These aren’t “tariff relief” plays—they’re “tariff immunity” plays. They win either way. Think: reshoring, subsidies, government contracts.
3. FX and Macro HedgingIf this truce holds and leads to more predictable trade flows, the U.S. dollar could weaken, especially against Asian currencies. That opens the door to commodity exposure (especially gold and copper) or emerging-market ETFs.
Playbook: Traders should watch for rotations into commodity equities and EM trades as risk appetite builds.
Strategic View: This Isn’t a One-Off. It’s a Signal.
Markets aren’t reacting to today’s press release—they’re pricing in a scenario where uncertainty recedes, capital flows normalize, and big institutional allocators stop sitting on the sidelines.
This weekend wasn’t a resolution. It was a mechanism.
And the smart money knows: mechanisms are what turn chaos into trend.
Dustin PassCEO, Market Traders Daily