China’s Ministry of Commerce has expressed that the United States should consider revoking its unilateral tariffs. This statement precedes scheduled trade talks between the US and China in Switzerland this weekend.

Expectations for substantial progress are low, as remarks from US Treasury Secretary Bessent suggest the talks will focus on de-escalation rather than negotiating a new trade deal. Former President Trump had previously stated that he would not remove tariffs unilaterally as a measure to encourage China to negotiate.

Stance on Trade Relations

If China holds firm on its current stance, it could delay any meaningful advancement in trade relations for an extended period.

That said, it’s clear that Beijing has set the tone ahead of the discussions, signalling that it won’t yield easily to Washington’s pressure without reciprocation. The appeal to remove unilateral tariffs echoes long-standing grievances over trade dynamics, which have weighed heavily on policy decisions for years. Yet from Bessent’s commentary, it appears Washington remains committed to a more tempered approach, preferring stability over fresh commitments.

The backdrop to these talks is one of expectation management—on both sides. We’re not looking at a breakthrough; rather, the goal appears to be to prevent tensions from climbing further. For traders, what matters here is less about the content of the talks, and more about the messaging and direction. Bessent’s framing of the meeting highlights a tone of calm engagement rather than escalation. That could suggest neither side is ready to aggressively shift policy in the immediate term.

Implications for Trade and Markets

From our seat, this indicates a range-bound environment for assets exposed to Sino-US risk. Without new tariff threats, volatility linked to headline risk begins to fade—for now. Still, this remains a binary issue—should communication deteriorate or posturing harden, realised volatility could quickly snap back. We must monitor not just the words exchanged in Switzerland, but also the tone taken in subsequent press briefings.

What is discouraging for forward-looking strategies is the low likelihood of any detail-rich framework emerging. The historical context remains important: under Trump, unilateral pressure was the preferred tactic. Now, with the current administration stepping back from that line, markets have a chance to price a slower, steadier route—less dramatic swings, but also fewer immediate catalysts.

With China’s stance firmly rooted in reciprocal measures, we’re unlikely to see a sudden reduction in existing tariffs unless political sentiment in Washington pivots. Meanwhile, any prolonged delay in resetting trade relations keeps the overhang intact for cross-border flows, particularly in semiconductors, machinery, and upstream tech components.

Traders in rate-sensitive derivatives should pay close attention to indirect effects—especially on dollar-yuan expectations—if official statements spill into currency policy rhetoric. Options pricing is not indifferent to prolonged stagnation, and the bid for protection can reappear quickly if even loose talk of tariffs resurfaces post-meeting.

We’d keep trade-exposed volatility structures moderately supported through the event window, while remaining flexible enough to roll into new positions should outcomes surprise. It bears repeating: the absence of escalation is not the same as resolution, and positioning accordingly will matter over the coming weeks.

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