In a recent address in Washington, U.S. Treasury Secretary Scott Bessent indicated that the escalating tariffs dispute between the United States and China is becoming unsustainable, hinting at a potential move towards de-escalation in this ongoing trade conflict.
While speaking to JPMorgan Chase, he emphasized that formal discussions between the two economic giants have yet to commence, despite the growing tension illustrated by high tariffs from both sides.
U.S. President Donald Trump has imposed a staggering 145% import tax on Chinese goods, with China retaliating by placing its own 125% tariffs on U.S. products, contributing to a volatile economic landscape.
This trade war, coupled with tariffs imposed on numerous other countries, has resulted in fluctuations in the stock market, with rising interest rates on U.S. debt as investors express concerns about a slowing economic growth trajectory and accompanying inflationary pressures.
According to sources familiar with Bessent’s remarks, he acknowledged the challenging nature of negotiations with China, stating, “Neither side thinks the status quo is sustainable.”
Reacting to Bessent’s comments, the S&P 500 stock index experienced a notable increase of 2.5%, following assertions from Bloomberg News about the potential for negotiations.
Trump acknowledged the uptick in the stock market during a press briefing but refrained from endorsing Bessent’s view of the trade situation as unsustainable.
Instead, he proclaimed, “We’re doing fine with China,” highlighting his desire for a more amicable relationship with Chinese President Xi Jinping, asserting that he intended to be “very nice” and not adopt a hardline stance.
Moreover, Trump suggested that future tariff rates with China could be significantly lower than the current 145%, stating, “It won’t be that high, not going to be that high.”
In contrast to ongoing conversations with nations like Japan, India, and those in the European Union, Trump has remained steadfast in his commitment to the baseline 10% tariff.
In a pointed statement, China’s Commerce Ministry warned other countries against trade deals with the U.S. that could come at the expense of Chinese interests, reinforcing the sensitive nature of these negotiations.
White House press secretary Karoline Leavitt noted that the Trump administration has already received 18 proposals from various countries seeking trade agreements with the U.S., stating that “everyone involved wants to see a trade deal happen.”
Compounding the uncertainty around tariffs, Trump has publicly urged the Federal Reserve to lower its benchmark interest rates.
He has gone so far as to suggest that he could dismiss Fed Chair Jerome Powell if he chose to do so, an assertion that underscores the tension between fiscal policy decisions and political pressures.
Leavitt clarified that Trump believes the Fed’s decision to maintain steady rates is politically motivated, rather than being in line with the best interests of the U.S. economy.
As the economic landscape continues to evolve, Trump expressed a desire for Powell to “be early” in rate cuts and stated, despite prior insinuations, that he had no intent to dismiss the Fed chair.
The diplomatic dance surrounding tariffs and trade continues, leaving many to anticipate how these discussions will shape the global economic environment.
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