Treasury Secretary Bessent says tariff standoff with China is unsustainable, expects de-escalation

US Treasury Secretary Scott Bessent told an investor gathering behind closed doors on Tuesday that the tariff standoff with China can’t last and that he thinks things will calm down.

People who attended Bessent’s session at an event in Washington, D.C., put together by JPMorgan Chase & Co. said that talks haven’t started yet but that a deal is possible.

Details of the speech were confirmed by two people who heard it but asked to remain anonymous in order to discuss it. “I do say China is going to be a slog in terms of the negotiations,” Bessent said, according to a transcript obtained by The Associated Press. “Neither side thinks the status quo is sustainable.”

China and the US have been in a tariff war almost immediately after Trump entered office. It has escalated to over 100% tariffs imposed on each other. The two giant economies depend on each other. For instance, last year the total US trade with China, both imports and exports, was estimated to be $582.4 billion. This is clearly unsustainable.

After the back and forth of retaliatory tariffs, Trump said that he was open to talks with Chinese President Xi Jinping after he hit China with an even higher tariff rate of 125%. On the other hand, after  Trump raised tariffs on China to the tune of 145%, China said it is ready to negotiate if Trump shows respect. 

However, in a message released Monday, China told other countries not to make trade deals with the US that could hurt China. This is to say, it is not clear where China and the US stand. 

The stock market rally on the hopes of an end to the China-US trade war

After the statement by Scott Bessent, US stocks went up. Investors were hopeful that President Trump’s trade fights would calm down in a number of areas.

As of 12:28 p.m. in New York, the S&P 500 index had gone up as much as 2.9%. There were gains of over 1.5% in the Dow Jones Industrial Average. The tech-heavy Nasdaq saw gains of over 1.8%.

US stocks went up on Wall Street, where stocks fell because Trump went on social media to attack Fed Chair Jerome Powell. This has made things worse between POTUS and the central bank.

The split made it even harder for investors to keep up with Trump’s fast-changing trade policy. They didn’t know where the economy would go next. However, trade talks between the US and India on Tuesday showed more progress.

Negotiations between the US and other nations are ongoing

Talks have taken place between the Trump administration and leaders from Japan, South Korea, the EU, Canada, and Mexico, among others. 

However, Trump has not publicly said that he wants to lower his base 10% tariff. However, he has said that he wants other countries to lower their own import taxes and get rid of any non-tariff hurdles that the US administration says have stopped exports.

Meanwhile, the US Vice President JD Vance visited India and met with Prime Minister Narendra Modi. Both of them showed signs of progress in the talks, which the White House said would cover security, energy, technology, and more. 

Also, Karoline Leavitt, the press secretary for the White House, told reporters on Tuesday that Trump told her that “we’re doing very well” on a “potential trade deal with China.” Leavitt said the Trump administration has received 18 proposals from other countries for trade deals with the US, adding that “everyone involved wants to see a trade deal happen.”

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