Investors are cautiously optimistic that recent U.S.-China trade talks in Geneva may ease the escalating trade war between the world’s two largest economies. U.S. Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer reported “substantial progress” after two days of negotiations with Chinese Vice Premier He Lifeng. While specific details of any agreement were not disclosed, Bessent indicated that further information would be provided on Monday. President Donald Trump described the discussions as a “total reset,” signaling a potential shift in trade relations.

The stakes are high, with hundreds of billions of dollars in trade and significant political tensions at play. Analysts caution that while market sentiment has improved, volatility remains elevated. The VIX index, a measure of market uncertainty, continues to reflect investor apprehension. Despite a rebound in markets following the sharp selloff triggered by the imposition of 145% U.S. tariffs and China’s 125% retaliatory duties, experts warn that a swift resolution is unlikely.

The Geneva talks represent the first direct engagement between U.S. and Chinese economic officials since the trade conflict intensified earlier this year. While no immediate breakthroughs are expected, the willingness to engage in dialogue is seen as a positive step toward de-escalation. Investors are hopeful that continued negotiations will lead to a more stable trade environment, though they remain cautious about the potential for setbacks.

Source: Reuters