The equity market rallied in July despite the fact that the official trade war with China commenced on July 6, 2018. As President Trump had been threatening China with tariffs for months leading up to that date, it allowed ample time for hedges to be put on to protect against a falling market. As the world did not come to an end in early July, many of those hedges were removed, cash came in, and the market rallied.
The relief rally has not eliminated the uncertainty around a protracted trade war with China, which continues to be a potential headwind for the markets.