In a speech on Tuesday, U.S. Treasury Secretary Scott Bessent stated that he anticipates a “de-escalation” in the trade war between the two biggest economies in the world and that the current tariff battle against China is unsustainable.
President Trump Announces Big Tariff Rollback on China: Markets React.
However, Bessent also warned that formal negotiations between the United States and China had not yet begun in a private speech for JPMorgan Chase in Washington. China has responded to U.S. President Donald Trump’s 145% import duties by imposing 125% tariffs on American goods.
As investors fear weaker economic growth and increased inflationary pressures, Trump’s tariffs on several dozen nations have caused the stock market to falter and interest rates on U.S. debt to rise. Two sources familiar with the statements, who requested anonymity to discuss the,m confirmed details of the speech.
According to a transcript that The Associated Press was able to get, Bessent stated, “I do say China will be a slog in terms of the negotiations.” “Neither side believes they can maintain the current situation.”
After Bessent’s comments were first reported by Bloomberg News, the S&P 500 stock index increased by 2.5 percent. During his remarks to reporters later on Tuesday, Trump acknowledged the increase in the stock market, but he did not explicitly state whether he shared Bessent’s belief that the situation with China was unsustainable.
Trump declared, “We’re doing fine with China.”
Trump promised not to play hardball with Chinese President Xi Jinping and to be “very nice” to China despite his hefty tariffs. Trump declared, “We’re going to live together very happily and hopefully work together.”
The ultimate tariff rate with China will drop “substantially” from the current 145%, according to the U.S. president. Trump declared, “It won’t be that high, not going to be that high.”
Among other countries, the Trump administration has held meetings with colleagues from South Korea, Japan, India, the European Union, Canada, and Mexico. Although Trump has stated that he is seeking other countries to lower their import tariffs and remove any non-tariff barriers that the administration claims have hampered U.S. exports, he has made no public signals that he intends to abolish his baseline 10% tariff.
China cautioned other nations on Monday against entering into trade agreements with the US that would harm its interests. China’s Commerce Ministry issued a statement saying, “China firmly opposes any party reaching a deal at the expense of China’s interests.”
Karoline Leavitt, the press secretary for the White House, stated that “everyone involved wants to see a trade deal happen” and that the Trump administration has received 18 proposals for trade agreements with foreign nations.
Trump’s demand that the Federal Reserve lower its benchmark interest rate and his threat to dismiss Fed Chair Jerome Powell if he so chooses have further increased the financial markets’ apprehension over tariffs.
According to Leavitt, Trump feels that the Fed has acted “in the name of politics rather than what’s right for the American economy” by keeping interest rates unchanged as it waits to see the effects of tariffs.
Although he had previously implied that he might fire the Fed chair, Trump later stated that he wanted Powell to “be early” in decreasing rates and that he has no plans to do so.