Tariffs Update: US-China Trade Talk & U.S. Court Ruling

The two-day negotiations between the U.S. and China continued in London, with both sides agreeing on a framework to implement previous trade deals, including adjustments related to rare earth export policies.

U.S. Commerce Secretary Lutnick described the discussions as “going really well”, suggesting they may extend into tomorrow.

However, markets remain cautious. While the framework marks progress, it still requires final approval from President Trump, according to Secretary Lutnick. As for the rare earth export restrictions—a central point in the current talks—they remain unresolved.

Trump Tariffs May Stay Longer Despite Legal Challenges

On the tariff front, the landscape remains complex. The higher steel and aluminum tariffs have already taken effect. Meanwhile, reciprocal tariffs on other major trading partners, which were postponed for 90 days, are set to expire in July.

Despite a recent U.S. court ruling that President Trump exceeded his authority under the IEEPA when imposing sweeping tariffs, the White House has appealed the decision.

The U.S. Court of Appeals has issued an order allowing the tariffs to remain in place temporarily, suggesting that Trump-era tariffs may stay longer than anticipated.

This sets up a potential July deadline for further trade clarity, raising the risk of renewed volatility across global markets.

Market Implication: Can the Stock Rally Last?

Global equities have remained buoyant, with major indices extending gains on the back of trade optimism.

However, with tariff-related uncertainty possibly returning in July, investors may need to brace for potential volatility ahead.

Technical Outlook: S&P 500

The S&P 500 remains resilient and continues its upward trajectory. However, recent price action has slowed, possibly reflecting investor caution despite the positive sentiment.

S&P 500, Daily Chart | Source: Ultima Market MT5

A rising wedge pattern is forming—often a precursor to a potential reversal. Still, a bearish signal would only confirm on a breakdown below the lower trendline.

Technical Outlook: Euro Stoxx 50 (EU50)

In Europe, the Euro Stoxx 50 is showing similar behavior, consolidating near its record high following recent gains.

EU50, Daily Chart | Source: Ultima Market MT5

Expect consolidation to continue in the near term. However, any fresh updates on the Trump tariff situation could spark renewed volatility across the European and global equity markets.

Risk Factors to Watch

While markets remain tilted toward optimism due to progress in U.S.–China trade talks, underlying uncertainties still persist. Trade negotiations can shift suddenly, and nothing is guaranteed until concrete agreements are finalized.

Moreover, U.S. fiscal risks remain a major concern, especially as we approach July, when a significant volume of U.S. government bonds are set to mature.

his could add renewed pressure on the bond market, potentially spilling over into broader market volatility if not handled with clarity and confidence by policymakers.

Disclaimer

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