Earlier this month, Trump once again announced a 100% tariff on Chinese goods. Yet this time, the S&P 500 didn’t flinch as much. Perhaps markets have grown used to the pattern — what many now call the “Trade War Cycle.”

Over the weekend, while markets were closed, Trump visited Malaysia as part of his Asia tour ahead of his meeting with Xi in Korea. Although framed as an ASEAN Summit, the real highlight was a quick negotiation between the US and China — a prelude to the APEC Summit.

This gave ASEAN countries a moment of prestige, playing host to what may turn out to be a pivotal step in thawing tensions between the two superpowers.

Trump’s deputies wasted no time engaging their Chinese counterparts. In a swift turnaround, both sides announced that a preliminary deal had been struck. Details remain vague, but the usual topics were reportedly discussed — tariffs, rare earths, fentanyl controls, TikTok, and soybean purchases.

The main goal was clear: defuse rising tensions between Trump and Xi after weeks of tit-for-tat escalations. If nothing else, this agreement is expected to avert the planned 100% US tariff on Chinese imports and delay China’s retaliatory export controls on rare earths by a year.

It might all sound familiar — and it is. The last round of talks was in May 2025 in Geneva, where initial progress gave markets hope, even though nothing binding was signed. Still, that meeting coincided with a major turning point: the S&P 500 was down nearly 20% from its peak, and the mere willingness to talk sparked a sustained market recovery.