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.--- 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:investingLive Americas market news wrap: Trump lobs a hand grenadeLate Friday:Trump announces a 100% tariff on China in addition to current tariffs, but not immediatelyChina responds over the weekend:China: Rare earth export control measures are 'legitimate', blames US for rising tensionSome TACO moves already, some murmurings of Trump already backing off. BRB with more on this:Taco time: Crypto jumps as Vance says Trump willing to be reasonable negotiatorLatest:Pentagon to buy $1bn in critical minerals to cut China relianceTrump says he thinks we are going to be fine with China, Nov 1 tariffs still the plan6.30am in Beijing. Traders might exercise caution, await China's response to Trump's cave This article was written by Eamonn Sheridan at investinglive.com.