US Treasury Secretary Scott Bessent stated on Tuesday that the ongoing trade war with China is "unsustainable" and expressed hope for a de-escalation in tensions between the two nations.
Speaking at a closed-door event hosted by JPMorgan Chase, Bessent emphasized that both the US and China recognize the current situation cannot continue indefinitely.
He noted that while formal negotiations have not yet commenced, he anticipates that discussions will eventually lead to a reduction in tariffs.
According to BusinessTimes, the trade conflict has seen the US imposing tariffs as high as 145% on Chinese goods, with China retaliating with 125% tariffs on American exports.
These reciprocal measures have effectively created a trade standstill, disrupting global supply chains and raising concerns about economic growth and inflation.
Bessent clarified that the Trump administration does not seek a complete economic decoupling from China but aims to achieve a "rebalancing" of trade.
This includes encouraging China to shift towards greater domestic consumption and the US to bolster its manufacturing sector.
He described the current high tariffs as "effectively trade embargoes" and suggested that both sides would likely agree to lower them in the near future.
The Trump admin is admitting defeat in its aggressive trade war against China, throwing in the towel after 3 weeks.
— Ben Norton (@BenjaminNorton) April 23, 2025
Billionaire Treasury Secretary Scott Bessent says the trade war is "unsustainable" and the US needs a "de-escalation".
The US economy will collapse without China.… pic.twitter.com/N4ZtMVM2Xl
Read more: US-China Trade War: Beijing Halts Rare Earth Exports, Affecting Global Tech, Auto, Defense Sectors
S&P 500 Jumps 2.5% on Hopes of China Trade De-escalation
Following Bessent's remarks, financial markets responded positively. The S&P 500 index rose by 2.5%, and the Nasdaq gained 2.7%, reflecting investor optimism about a potential easing of trade tensions, AP said.
The US dollar also strengthened, and Treasury yields fell, indicating reduced concerns about inflation.
President Donald Trump, however, did not directly address Bessent's comments. In a separate statement, Trump asserted that the US is "doing fine with China" and expressed a desire for a cooperative relationship with Chinese President Xi Jinping.
He also indicated that the final tariff rates would be "substantially" lower than the current levels.
Despite the positive market reaction, Bessent cautioned that negotiations with China would be challenging and could take time.
He acknowledged that the path to a comprehensive trade agreement would be "a slog," but remained hopeful that both nations would ultimately find a mutually beneficial resolution.
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