Trump’s Tariff Backpedal Sparks Fragile Crypto Market Relief—For Now

Trade tensions thaw as Washington dials down China tariffs—just don’t ask how long the détente lasts. Markets breathe easy, Bitcoin gets a volatility haircut, and Wall Street pretends it saw this coming all along.

Behind the truce: A classic case of economic brinksmanship meets election-year optics. Beijing gets temporary relief, DC gets campaign soundbites, and crypto traders get whiplash.

The real winner? Stablecoin issuers—because nothing fuels Tether’s printing press like geopolitical uncertainty and the hedge funds that profit from it.

Xi Jinping Scores Big as Trump Pulls Back

For Chinese leader Xi Jinping, this was a strategic win. He didn’t give in to Trump’s pressure. Instead, he played the long game—boosting nationalism, finding new trade partners, and holding the line on talks. When the U.S. finally blinked, it met most of Beijing’s key demands.

Now, China sees this as proof of its growing economic leverage. Beijing got the U.S. to assign a top negotiator and ease fentanyl-related pressure. Xi’s defiance has paid off, at least in the short term. But with DEEP structural issues still untouched, the question is: how long can China hold this position?

Tariffs Lifted, Growth Hopes Rise

The easing of tariffs sparked a wave of GDP upgrades for China. UBS now sees China’s 2025 growth reaching between 3.7% and 4%, up from a previous 3.4%. Morgan Stanley expects Q2 GDP to beat its earlier 4.5% forecast, driven by companies rushing to export before tariffs possibly return. They also believe Q3 growth could show more resilience, thanks to front-loaded production and global demand catching up.

Natixis revised its outlook from 4.2% to 4.5%, and ANZ similarly sees upside, citing a more favorable trade environment. These changes reflect optimism that the trade truce could soften the economic hit from earlier tariffs. Still, most analysts agree this rebound is tactical, not structural. If the 90-day pause ends without a broader deal, the growth bump could disappear just as fast.

U.S. Gets Breathing Room, Recession Fears Cool

Trump’s tariff climbdown gave the U.S. a break. Inflationary heat is easing. Supply chains are unclogging. That’s why Goldman Sachs cut recession risk and scaled back its Fed rate-cut forecasts. The WHITE House even rolled back its steep de minimis tariff on low-value Chinese shipments.

That’s a win for e-commerce giants like Shein and Temu, who rely on cheap postal access to U.S. consumers. Still, critics argue the move weakens American industries. And with an election looming, TRUMP could flip again—especially if the economy slows or political pressure ramps up.

Tariffs Still Cloud the Bigger Picture

Markets may have jumped on the trade truce, but China’s internal problems haven’t gone away. After Monday’s rally, the Hang Seng Index dropped nearly 2%, and the CSI 300 lost early gains. Investors worry the Chinese government might now delay more stimulus, thinking the tariff relief gives it breathing room. But without fresh spending, underlying weaknesses—like sluggish consumption and the property market slump—could worsen.

Local governments remain deep in debt, and businesses are still cautious. The rally also skipped over sectors most exposed to global volatility. Analysts say the truce doesn’t change the fundamentals. Tariffs may be down, but the trade relationship is still fragile. And with Trump’s track record of sudden reversals, no one is betting this calm will hold.