European governments got a major reprieve this week. After the initial shock of potential tariff escalation, Trump reversed course on his European tariff threat, catching many officials and market players off guard. The sudden policy shift signals a recalibration in trade tensions that have been weighing on sentiment across multiple asset classes. Davos insiders are already dissecting what this actually means for the broader economic outlook. When geopolitical friction eases, risk-on appetite typically returns to markets. This kind of policy reversal—even if temporary—can shift expectations around inflation, growth, and currency volatility. For traders monitoring macro trends, these trade policy pivots matter more than you might think.