The United States and China have agreed to a 90-day truce in their ongoing trade dispute, significantly scaling back reciprocal tariffs and establishing a structured negotiation framework.
What Happened: According to market analysts, this shift has removed a major source of tail risk and could drive a broad-based rebound in risk assets, including U.S. equities, the dollar and altcoins.
Under the terms of the provisional agreement announced Monday, the U.S. will impose a 30% tariff on Chinese imports, comprising a 10% base tariff consistent with other trading partners and an additional 20% specifically targeting fentanyl-related concerns.
However, officials hinted that the total tariff burden could decline to just 10% pending progress in fentanyl negotiations.
On the Chinese side, tariffs on U.S. goods have been immediately reduced to 10%, and all non-tariff barriers, including rare earth export bans and aviation restrictions, have been lifted.
"This is a critical development," said Aurelie Barthere, Principal Research Analyst at Nansen. "It effectively removes the tail risk of sudden re-escalation during the agreed 90-day negotiation window."
Barthere added that assets previously underperforming, such as altcoins, U.S. equities, and the dollar, now appear positioned for a catch-up rally.
"Bitcoin (CRYPTO: BTC) has been the clear outperformer so far… but with the latest Bessent and Greer announcements, I expect broader asset classes to begin catching up as the risk environment improves."
The tone of negotiations has also shifted.
Treasury Secretary Scott Bessent emphasized a cooperative framework, noting that the two sides have "an established process, a mechanism, and clearly mandated negotiators," marking a contrast to the volatility of past talks.
Both governments highlighted "common interests" and explicitly rejected the idea of economic decoupling.
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Why It Matters: Markets responded swiftly. U.S. one-year yields rose nearly 10 basis points, suggesting a repricing of Federal Reserve expectations and reduced concerns over recession-linked rate cuts.
While tariffs on key sectors like autos and steel remain, experts suggest the ongoing negotiations may shift toward company-level solutions in sensitive areas such as semiconductors and pharmaceuticals.
From a digital asset perspective, the clearer macro picture is already impacting trading flows.
BlackRock's (NASDAQ:BLK) recent meeting with the SEC to discuss Ethereum ETF staking underscores this pivot.
Rohan Misra, Head of GCC at AMINA Bank, added that current market behavior differs from the all-asset rally of 2021.
"Only forfeited assets will be included in the U.S. digital asset stockpile. Digital assets with real-world use cases should see more traction as institutional momentum builds," he told Benzinga, while highlighting the central role of global macro factors in sustaining Bitcoin's leadership.
The truce agreement also includes a push by the U.S. to expand market access in China for U.S. goods and services, including agricultural exports, LNG and financial firms.
Currency manipulation was discussed but not emphasized, suggesting both sides aim to keep the negotiations focused on trade flows.
While uncertainty remains over whether risk assets can revisit their peak optimism levels from January, analysts agree the new framework reduces downside volatility.
"There is potential for risk assets to move beyond the January peak levels if we see a generous tax cut package materialize," Barthere said.
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