Goldman Sachs said it expects both Washington and Beijing to step back from the brink of a full-blown trade war after President Donald Trump threatened an additional 100% tariff on Chinese imports in response to Beijing’s rare earth export curbs.
The bank said the most likely outcome is that both sides de-escalate their most aggressive positions and return to negotiations, leading to an extension — possibly an indefinite one — of the tariff-pause agreement reached in May. Goldman noted that while tensions remain high, neither side has an interest in triggering major economic disruption given the global reliance on Chinese rare earths and the US’s own exposure to supply-chain risks.
The analysis implies that Trump’s threat may be intended as leverage rather than an imminent policy move, while Beijing’s restrictions may serve as a bargaining tool to protect its technological advantage. Goldman sees the likely path as a “managed confrontation” — a tense but stable phase in which both economies avoid escalation while maintaining political pressure.
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Goldman’s assessment points to a lower immediate risk of tariff escalation, which could support risk assets and commodity markets sensitive to rare earth supply. However, the “pause” scenario still leaves uncertainty over trade policy and tech-sector supply chains.
Earlier:
Friday ICYMI:
Late Friday:
China responds over the weekend:
Some TACO moves already, some murmurings of Trump already backing off. BRB with more on this:
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