A new report by China International Capital Corporation (CICC) explores the potential impact of U.S. trade negotiations on interest rates. The report suggests two scenarios based on the outcome of these talks. If no significant progress is made in trade negotiations, leading to sustained high tariff levels after 90 days, a weakening economic demand could result. This may prompt the Federal Reserve to initiate interest rate cuts as early as July, potentially lowering rates by up to 100 basis points this year. Conversely, if trade negotiations are successful and lead to reduced tariffs, the substitution effect might lessen demand shock but could also exacerbate inflation. The Federal Reserve could then delay easing measures until December, resulting in only a minimal rate cut. For investors, even earlier cuts in the first scenario would reflect an economic downturn reflected in potential risk asset suppression.