Speaking yesterday at a private event sponsored by JPMorganChase, Treasury Secretary Scott Bessent caused some ripples when he proclaimed that the current trade war between the U.S. and China was “unsustainable,” and that he expected a “de-escalation” to take place very soon, reports Associated Press, which obtained a transcript of the event. “Neither side thinks the status quo is sustainable,” Bessent elaborated, describing the current situation as a trade embargo. “I do say China is going to be a slog in terms of the negotiations,” he cautioned.
After the S&P 500 closed 2.5% higher following Bessent’s remarks, Financial Times explained the markets may have responded “too optimistically,” since no negotiations are currently taking place between the U.S. and China. But Bessent said he was sure that there will be a de-escalation in the “very near future” and emphasized that “the goal isn’t to decouple.”
The same day, President Trump told reporters in the Oval Office that “we’re doing fine with China,” adding he would be “very nice” to China and not play hardball with President Xi Jinping. “We’re going to live together very happily and ideally work together.” The current 145% tariff rate will come down substantially, he continued, although it won’t go to zero. But he asserted, “China has to make a deal, because if they don’t make a deal, they won’t be able to deal in the United States.” Neither President Xi Jinping nor Foreign Minister Wang Yi have indicated any desire to communicate with Trump as long as China is subjected to bullying and threats.
