A potential call between Trump and Xi could occur in the coming weeks or months. This may precede any face-to-face meeting between the two leaders.

Trump previously considered an 80% rate as insufficient for a Chinese embargo, proposing a return to the 54% tariff level from 2 April. Discussions may extend beyond the current 90-day timeline unless negotiations between both parties break down.

The 90 Day Timeline

The 90-day period is seen as an initial phase, with the possibility of extending it if needed. There is speculation on whether delays might lead Trump to lose patience if no progress is made.

Trade sentiment remains tethered to official cues, with timing and tone now playing a larger role in shaping expectations than sheer content. A potential conversation between the US and Chinese leadership has not yet been scheduled, but the suggestion alone triggered a slight stir in short-dated positions linked to tariff-sensitive sectors. The market response was not abrupt—rather, it showed early signs of recalibration, especially in December contract volatility.

Trump’s prior remarks regarding rollback figures, particularly his dismissal of the 80% proposal in favour of the earlier 54% rate, suggest that bargaining room on tariffs may continue to narrow. Investors should be wary of reading too much into short statements; the tendency to float trial balloons complicates outlook-building. Lighthizer has shown a preference for fixed structures over moving goalposts, and that steadiness tempers the more erratic signals seen elsewhere.

The Implications Of Extensions

The 90-day period, initially laid out as a cooling-off phase, functions more like a checkpoint than a final deadline. Concerns that this window might close without delivering outcome are no longer abstract. If public language from White House officials remains ambiguous, time decay on options will mirror indecision. We’ve already seen implied volatility climb at the first hint of delay, which tells us positioning continues to shift with headlines rather than fundamentals.

There is a growing chance the period could be extended quietly, especially if talks appear to have traction but no closure. What we’ve observed so far is positioning that reflects not only uncertainty but an active adoption of hedges favouring unmanaged risk. Structural bets on longer-term détente haven’t yet returned in the way they did last cycle—likely due to scepticism over whether enforcement mechanisms will materialise.

For our part, we’ve taken signals directly from bid-ask moves in the early January strips. The shortening of exposure windows, particularly in FX-linked derivative products, indicates heightened sensitivity to White House mood swings. Market-makers responded more quickly than expected, rebalancing order books to anticipate higher-frequency shifts in direction.

Mueller’s continued backdrop adds an element of unpredictability. While not directly tied to tariffs, the pressure in Washington translates into sporadic policy gestures, some of which feed back into trade strategy. Navarro remains a vocal figure, but his influence over timing appears diluted. Industry groups haven’t weighed in publicly in recent sessions, although their pressure behind closed doors could impact the next trade announcement.

Anecdotally, the bid for downside protection in emerging market proxies has crept upward. That’s partially explainable by rotation out of safer assets as traders seek yield, but it also reflects broader discomfort with the idea that any thaw might end prematurely. The narrative around progress remains speculative, yet enough friction persists to drive cautious positioning across the board.

Markets now wait not for what’s said, but for how long it takes to say it. Traders should avoid relying on calendar expectations and watch for verifiable outcomes instead. Deviation from timeline norms serves as a better gauge of momentum than any statement from either side. Tensions may not resolve quickly, but measurable shifts in volume and spread behaviour offer more reliable clues than optimistic language.

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