Insights 
VT 
United States President Donald Trump announced plans to potentially converse with Chinese President Xi Jinping, as talks between the US and China progress towards a possible trade deal. The expected agreement, however, does not include tariffs on cars, steel, aluminium, or pharmaceuticals.
There were amicable discussions in Geneva, with China agreeing to dismantle non-monetary barriers, cease fentanyl production, and open its markets more. Trump also mentioned that the US is prepared to assist India and Pakistan on trade matters, with prospective negotiations with Pakistan.
Investment Risks And Disclaimers
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These recent developments suggest Washington and Beijing are trying to project a more collaborative tone, despite lingering friction in several key areas. While the current scope of talks narrows focus away from industrial tariffs and pharmaceuticals, we note efforts are still ongoing in less visible sectors like intellectual property and digital services. The fact that automotive and metals tariffs remain outside the draft agreement hints at sectors likely to remain volatile or politically sensitive.
The Geneva meetings indicate some progress on technical trade points, particularly where China has agreed to reduce behind-the-scenes trade frictions. These typically involve regulations that complicate access to Chinese markets in ways that don’t involve tariffs — certifications, licensing delays, or approval thresholds that have so far discouraged many non-Chinese firms. If those are genuinely rolled back, the medium-term boost to market access could be understated at present.
In terms of commodities, the mention of fentanyl production addresses a broader political concern more than market supply chains — but it shows how trade talks are being used as leverage points in overlapping policy arenas. From our view, that’s not to be dismissed because it subtly aligns trade concessions with pressure points in bilateral relations. This might set the ground for similar arrangements with countries facing U.S. scrutiny in other areas, such as labour conditions or digital content policies.
Regional Implications And Market Dynamics
Trump’s suggestion of facilitating negotiations with Islamabad brings in another dimension. It’s a reminder of how multilateral pressures are being applied not just to traditional economic allies but also to emerging regions. For us, this opens up the possibility that regional trade agreements in South Asia could receive a lift, which deserves close observation given the implications for currency markets and interest rate expectations.
Even though autos, steel, and pharmaceuticals are currently excluded, these sectors must not be ignored entirely. When key industries are left off the negotiating table, it tends to follow that they may be used as future leverage points. It’s not uncommon to see reintroduction of such sectors at later stages once preliminary trust has been established during early phases of broader economic talks.
From our side, we advise thorough screening of correlation between announcements and actual legislative movement. Most of the forward-looking optimism built into the markets tends to price in best-case outcomes far ahead of confirmation. We’ve seen this before — initial agreement talk can inflate short-term instruments before the legal text has even made it onto draft pages.
With that in mind, implied volatility across exposed sectors should continue to fluctuate until a clearer schedule of implementation is released. Markets are reacting more to tone than tangible changes, which means sharp reversals remain a risk around policy statements or tweets, especially if expected outcomes aren’t formally followed up.
We are currently monitoring term structure dislocations in futures and options pricing that may not fully align with fundamental commodity flows or trade volume data. In such environments, short-term derivatives may offer tactical opportunities if handled with discipline. But this assumes access to accurate cross-border trade monitoring and a strict approach to exposure management based on reference data, not opinion.
As always, any action within these instruments demands precision and a well-defined methodology. Without this, one risks misreading sentiment as substance — and history shows that separation often only becomes clear in hindsight.
