As of October 26, 2025, with the critical Trump-Xi meeting in Busan now just four days away, the market is pricing in de-escalation. The vibe from negotiators, President Trump himself, and recent market moves points strongly toward a partial deal. We are not expecting a sweeping “Phase Two” overhaul, but rather a “stability pact” that includes tariff freezes, rare earth concessions, and wins on agriculture and fentanyl.
This optimism is grounded in two key developments. First, President Trump’s Asia tour is already a perceived success, having secured a major trade pact with Malaysia and overseen the signing of a historic peace accord between Thailand and Cambodia today. This builds significant momentum.
Second, and more importantly, Treasury Secretary Scott Bessent just concluded preparatory talks in Malaysia, stating today that a “very successful framework” has been created for the leaders’ summit. This has been widely interpreted as a green light for a deal to avoid the threatened 100%+ tariffs. While friction over China’s rare earth controls remains, the real catalyst for this meeting is the fact that the 90-day tariff truce, first agreed to in May, is set to expire on November 10. Both sides are now clearly in “damage control” mode to prevent a catastrophic escalation.
Probability Scenarios
Here is my probability breakdown for the Busan summit, calibrated from analyst takes, Trump’s “good chance” rhetoric, and the positive market sentiment.
Partial Deal / De-Escalation (70% Probability – Base Case)
This is the most likely outcome. Expect a handshake deal to extend the tariff truce, ease China’s rare earth export controls, and secure Chinese purchases of U.S. soybeans and fentanyl commitments. It’s a “win-win” that lets both leaders save face. This high probability is justified by Bessent’s positive comments and the mutual need for stability amid China’s 4.5% growth wobble and upcoming U.S. election optics.
- Crypto Impact: This is the risk-on scenario. BTC would likely surge, testing the $120K-$125K resistance level.
No Deal / Status Quo (20% Probability)
Talks are “productive” but end without a concrete deal, pushing the deadline to a potential Q1 2026 meeting. Existing tariffs (around 55-60%) remain in place. This could happen if IP or tech transfer talks hit a wall, but it seems unlikely given Trump’s desire for a public victory on this trip.
Escalation / Failure (10% Probability – Tail Risk)
The long-shot scenario. Talks collapse, Trump follows through on 155% tariff threats, and Xi retaliates by banning more exports. This would spark a new, damaging phase of the trade war. It’s unlikely because both economies are fragile, but it’s not impossible if the rare earth dispute becomes non-negotiable.
- Crypto Impact: A 10-20% flash crash, pushing BTC back toward its $100K floor.
Crypto Market Read
The market is already pricing in a positive outcome. Following Secretary Bessent’s optimistic comments, Bitcoin saw a 2% jump with a 25% spike in volume. BTC is currently holding support well above $108K, having seen a high near $122K earlier this month. A 70% chance of a deal means traders are already front-running the “risk-on” move, making a “sell the news” dip possible even if we get the expected partial deal.
Bottom Line
My bet is that we get the partial deal. Trump won’t want to end his successful Asia tour with a failure, and China needs to stabilize its export-driven economy. This is a game of geopolitical poker, so the real signal won’t be the handshake photo, but the specific tariff schedules released afterward. If the outcome is positive, it’s a green light for risk assets.
