Trump 100% tariff removal? China-US trade framework agreement reached, Bitcoin rebounds nearly 3%

U.S. Treasury Secretary Mnuchin stated that substantial progress has been made in the framework of the trade agreement between the U.S. and China, sparking renewed hopes for a bull run among investors. Mnuchin indicated that the new framework could eliminate the 100% additional tariffs announced by President Trump on October 10. Trump confirmed that he will meet with Chinese leaders at the APEC summit. Following the news, Bitcoin surged nearly 3%, rising above $114,000.

Bessent announces substantive framework for China-US trade, eliminating Trump tariff threats

(Source: White House)

U.S. Treasury Secretary Mnuchin said on Sunday that the United States and China have made “substantial” progress on the framework of a trade agreement, marking a significant turning point in the trade relationship between the two countries. Mnuchin stated that the proposed U.S.-China trade framework could eliminate the need for the 100% additional tariffs announced by President Trump on October 10. He added, “President Trump threatened to impose 100% tariffs on November 1, which gave me a lot of negotiating leverage, and I believe we have reached a very substantial framework that can avoid that situation and allow us to discuss many other things with the Chinese.”

This statement reveals the negotiation strategy of the Trump administration: a 100% tariff was, from the very beginning, a bargaining chip rather than a policy intended to be implemented. This “maximum pressure” strategy is a common tactic used by Trump in business negotiations, forcing the other party to make concessions by presenting extreme demands, ultimately reaching a relatively moderate agreement. From this perspective, the announcement of a 100% tariff on October 10 was a tactical threat aimed at creating pressure for the negotiations with Beisente.

The specific content of the “substantive framework” has not yet been announced, but from Bessent's statements, it seems that this framework not only addresses tariff issues but also opens up space for “discussing many other matters.” This could include deeper trade issues such as intellectual property protection, technology transfer, market access, and subsidy policies. If progress can be made on these structural issues in China-U.S. trade, it will provide a more solid foundation for global economic stability.

Before Besant made the above remarks, the trade tensions between the two countries had eased for several weeks, and President Trump ultimately confirmed that he would meet with Chinese leaders at the Asia-Pacific Economic Cooperation (APEC) summit on October 31. President Trump had previously stated that there was “no reason” to meet with Chinese representatives, raising concerns among investors about a new round of protracted trade war between the two countries. The shift in attitude from “no reason to meet” to confirming summit dialogue is evidence of the easing of tensions.

The APEC summit “Trump-Xi meeting” on October 31 may become a watershed moment for China-U.S. trade relations. If the two leaders reach a broader consensus at the summit and announce specific details of a trade agreement, it will completely alleviate market concerns about an escalation of the trade war. On the contrary, if the talks fail to yield substantive results, the market may fall back into panic. Therefore, October 31 will be a key date that China-U.S. trade observers must focus on.

Bitcoin rises nearly 3% due to easing China-US trade tensions

(Source: CoinMarketCap)

Cryptocurrency investors, traders, and industry executives welcomed the news regarding the U.S.-China trade framework and the increasing likelihood of an agreement between the U.S. and China, as the cryptocurrency market experienced a slight uptick due to positive trade agreement news. The cryptocurrency market is very sensitive to developments in the trade war; it rises when news is favorable and falls when trade tensions escalate or global trade is disrupted.

On October 11, President Trump announced on social media a 100% tariff on Chinese goods, triggering a collapse in the cryptocurrency market, with some cryptocurrency tokens depreciating by as much as 99% within 24 hours. This crash is one of the most severe single-day corrections in the history of the crypto market, with over $20 billion in leveraged positions being forcibly liquidated. Bitcoin plummeted more than 15% from near its historic high, while mainstream coins like Ethereum and Solana saw even greater declines.

In contrast, the market reaction after Bessent announced the China-US trade framework on Sunday was relatively mild yet positive. Bitcoin, Ethereum, and Solana all experienced a rise. This relatively mild rebound may reflect a cautious optimism in the market: investors welcome the easing of trade tensions but are reluctant to chase prices too high before seeing the details of specific agreements and the outcomes of talks with Chinese leaders.

Comparison of the Crypto Market's Reaction to Sino-U.S. Trade News:

October 11 (100% Tariff Announced): Bitcoin plummeted 15%, some tokens dropped 99%, $20 billion liquidated.

October 24 (Substantial Framework Announcement): Bitcoin pumped 1.8%, Ethereum pumped 3.6%, Solana pumped 3.7%

Solana's price increase reached 3.7%, leading mainstream coins, which may be related to its higher adoption rate in the Asian market. The improvement of China-US trade relations will create a more favorable environment for the application of Solana in China and surrounding markets. In addition, Solana's high-performance characteristics make it a preferred allocation target when risk appetite rises. When investors are willing to take on more risk, they often rotate from Bitcoin to Ethereum and then to Solana and other high beta coins.

Jeff Park, an advisor at the investment firm Bitwise, stated that positive news regarding the China-U.S. trade agreement will drive BTC and gold to new historical highs. This prediction is based on macroeconomic logic: the completion of a trade agreement will eliminate a major source of uncertainty in the global economy, driving up risk assets. Although Bitcoin and gold have different characteristics (Bitcoin is a risk asset while gold is a safe-haven asset), both benefit from global liquidity easing and geopolitical stability.

“If the China-US trade agreement is announced and the Federal Reserve cuts interest rates, asset prices will go crazy this week. Buckle up,” said investor and analyst Anthony Pompliano. Pompliano's prediction combines the China-US trade agreement with the Federal Reserve's interest rate cut, believing that the combination of these two catalysts will trigger a surge in asset prices. A Federal Reserve rate cut means increased dollar liquidity and lower funding costs, which is beneficial for all risk assets. If, against the backdrop of a rate cut, the China-US trade agreement also eliminates geopolitical risks, the market may welcome a bull run fueled by “double benefits.”

Trump's Negotiation Strategy: Compromise After Maximum Pressure

Benson's statement reveals the strategic thinking of the Trump administration in the China-U.S. trade negotiations. “President Trump threatened to impose a 100% tariff on November 1st, which gave me significant negotiating leverage,” this statement clearly acknowledges that the 100% tariff is a negotiation tool rather than a real policy. This strategy has been used repeatedly throughout Trump's business career and during trade negotiations in his first term, with significant effectiveness.

The logic of the maximum pressure strategy is: by making extreme demands to create a sense of crisis, compel the other party to make greater concessions at the negotiating table. When faced with the choice of “accepting a milder agreement” or “bearing extreme tariffs,” the other party often opts for the former. From this perspective, the 100% tariff announced on October 10 was never intended to be truly implemented; its purpose was to create pressure and urgency for negotiations.

However, this strategy also has risks. The collapse of the crypto market on October 11 showed that even tactical threats can have real impacts on the market. $20 billion in liquidations and a 99% drop in some tokens caused actual wealth loss and a blow to confidence. From a risk management perspective, the extreme pressure strategy of the Trump administration, while achieving negotiation goals, also created market instability and investor panic, and whether this cost is worth it is debatable.

Now, with the achievement of the “substantive framework,” the market is correcting the excessive reaction from October 11. The slight rise in cryptocurrencies is a rational response to the removal of tariff threats. If the “Trump-Xi meeting” on October 31 goes smoothly and officially announces the cancellation of the 100% tariff threat, the crypto market may see a stronger rebound. Conversely, if the talks break down or the details of the agreement are disappointing, the market may retest the lows from October 11.

APEC Summit Becomes a Key Milestone in China-U.S. Trade

President Trump has confirmed that he will meet with Chinese leaders at the Asia-Pacific Economic Cooperation (APEC) summit on October 31, a crucial time point for both China-U.S. trade and the crypto market. The APEC summit is the highest-level economic cooperation forum in the Asia-Pacific region, and the choice of this occasion for talks by the two leaders demonstrates the formality and seriousness of the dialogue.

President Trump previously stated that there was “no reason” to meet with Chinese representatives, raising investors' concerns about a new round of protracted trade war between the two countries. The shift from “no reason to meet” to confirming summit talks suggests that substantial progress may have been made behind the scenes in negotiations. Typically, high-level leadership talks are held after most of the negotiation work is completed at the staff level to ensure that the discussions can yield positive results and avoid the embarrassment of “returning empty-handed.”

On October 31, there is only one week until Besant announces the “substantial framework,” which provides the market with a clear timeline. Investors now have a clear observation point: if the talks on October 31 are successful and a China-U.S. trade agreement is formally reached, the crypto market may experience a rebound similar to that following the signing of the first phase of the China-U.S. trade agreement in 2019. Conversely, if the talks fail to reach an agreement, the market may reprice risks, leading to adjustments.

For cryptocurrency investors, the week leading up to October 31 is full of uncertainty. A conservative strategy is to wait for the outcome of the talks to make decisions, avoiding bets in a single direction. An aggressive strategy is to position in advance, betting that the China-U.S. trade agreement will be smoothly achieved, but strict stop-losses need to be set to deal with unexpected events. A medium-risk strategy is to participate with light positions, reserving ammunition to wait for a clear direction after October 31.