In recent developments, U.S. Treasury Secretary Scott Bessent expressed concerns about the long-lasting trade tensions between the United States and China, declaring them unsustainable during a speech given in Washington. He anticipates a future reduction in hostilities in the ongoing trade war between these global economic powerhouses.
Speaking at a private event hosted by JPMorgan Chase, Bessent highlighted that talks aimed at resolving the trade dispute have not yet formally commenced. This comes after U.S. President Donald Trump implemented a steep 145% import tax on Chinese products, prompting China to respond with a 125% tariff on American goods. Trump’s aggressive tariff policies extend beyond China, affecting multiple countries and resulting in market instability, increased interest rates on U.S. debt, and investor concern over potential impacts on economic growth and inflation.
Individuals familiar with Bessent’s speech, who chose to remain anonymous, confirmed these sentiments. According to a transcript, Bessent remarked on the arduous nature of the anticipated negotiations with China, emphasizing that both nations recognize the current circumstances cannot persist indefinitely.
Following coverage from Bloomberg News of Bessent’s comments, the S&P 500 stock index saw a 2.5% increase. However, in subsequent comments to the press, President Trump refrained from confirming whether he shared Bessent’s view regarding the unsustainable nature of the trade impasse, instead insisting on positive relations with China.
Trump expressed a willingness to adopt a cordial approach towards China, stating his intention to work harmoniously with Chinese President Xi Jinping. He mentioned plans to significantly reduce the existing 145% tariff rate on Chinese goods, suggesting future adjustments.
Amidst ongoing negotiations with other nations such as Japan, India, South Korea, the EU, Canada, and Mexico, Trump has not indicated any significant shifts in his baseline 10% tariff strategy. Yet, he continues to encourage these countries to lower their import taxes and dismantle other trade barriers that the U.S. administration claims have negatively impacted American exports.
China, meanwhile, issued a cautionary statement to other nations considering trade agreements with the U.S. that might disadvantage China. The country’s Commerce Ministry expressed firm opposition to any deals at China’s expense.
White House Press Secretary Karoline Leavitt reported that the U.S. has received proposals for new trade agreements from 18 different countries, reflecting a mutual interest in reaching a resolution.
These uncertainties surrounding tariffs have exacerbated volatility in financial markets, coinciding with President Trump’s calls for the Federal Reserve to slash its benchmark interest rates. Despite suggesting that he could remove Fed Chair Jerome Powell, Trump clarified that he has no plans to do so, urging instead for proactive rate reductions to better the U.S. economy.
Trump reiterated his desire for the Federal Reserve to act preemptively in lowering rates, dismissing any notion of firing Powell, despite previous indications to the contrary.