Tariff easing is coming no earlier than Trump’s visit to China in early 2026

Wolfe Research notes a thaw in U.S.-China relations following a call between President Trump and President Xi, characterized by "positive noises" and Trump's "dealmaking/de-escalation mode," including Xi's approval of the TikTok deal framework. Despite a perceived shift in Washington's export control policy aimed at maintaining China's reliance on U.S. tech, the firm cautions that tariff relief is unlikely in the near term, potentially not before Trump's early 2026 visit to China, with fentanyl tariffs remaining a key sticking point.

Analysis

A recent analysis from Wolfe Research indicates a notable de-escalation in U.S.-China tensions following a call between President Trump and President Xi, which was characterized by positive rhetoric from both sides. This thaw is evidenced by Trump's description of a "dealmaking/de-escalation mode" and Xi's approval of the TikTok deal framework. However, this surface-level progress masks a lack of substantive movement on key economic issues such as soybean purchases. The analysis highlights a strategic shift in Washington's export control policy, termed the "Jensen Huangification," which aims to maintain China's dependency on the U.S. technology stack rather than pursue complete decoupling. This is supported by the withdrawal of a hardline nominee for a key Commerce Department post. Despite these positive geopolitical signals, the core takeaway is one of caution: the firm stresses that significant tariff relief is highly unlikely in the near term, projecting no material changes before Trump's potential visit to China in early 2026 at the earliest, with fentanyl-related tariffs remaining a major sticking point.

Key Decisions for Investors

• Investors should temper expectations for a near-term cyclical uplift in sectors heavily exposed to U.S.-China tariffs, as the analysis indicates existing duties will likely remain a headwind until at least early 2026.
• The noted shift in U.S. export control policy, aimed at keeping China reliant on the American tech stack, may reduce the immediate risk of further aggressive restrictions, potentially benefiting U.S. technology and semiconductor firms with significant China exposure.
• Monitor future developments related to fentanyl restrictions and agricultural purchases, as progress on these specific issues will be critical leading indicators for any potential acceleration of the tariff relief timeline.