Key Takeaways
- Treasury Secretary Scott Bessent said the U.S.-China tariff war is “unsustainable” and will likely “de-escalate.”
- Bessent’s comments fueled a stock market rally due to the prospect of a deal ending a trade war that could be destructive to both economies.
- Bessent said the two countries have not yet begun to negotiate, but a deal is possible.
Treasury Secretary Scott Bessent sparked optimism in financial markets Tuesday when he called the tariff-driven trade war between the U.S. and China “unsustainable” and said it would likely “de-escalate.”
Bessent made the comments at a closed-door meeting of investors hosted by JP Morgan Chase in Washington Tuesday, according to a report by Bloomberg. He said the two sides had not yet begun to negotiate, but that a deal was possible, the news outlet said.
In recent months, the U.S. and China have ramped up a tit-for-tat exchange of tariffs, putting higher and higher taxes on one another’s exports as part of President Donald Trump’s far-reaching trade war against U.S. trading partners. U.S. tariffs against China are as high as 245% on certain products, according to the White House.
Economists and business leaders have warned of far-reaching effects from the new trade barriers between the world’s two largest economies, which are heavily intertwined. For instance, American consumers could face higher prices and shortages on certain products, such as toys.
Stock markets rallied Tuesday afternoon after Bessent’s comments were reported, with the S&P 500 stock index up nearly 2% on the day. Stocks have taken a beating amid Trump’s erratic tariff campaign, as he has announced, rescinded, and modified various tariffs since his inauguration. Investors and businesses have scrambled to guess which tariffs are permanent barriers meant to protect U.S. industry, and which are leverage for negotiations ultimately leading to free trade deals.
Tuesday afternoon, Trump told reporters that he also thought a deal with China would be reached.
“If we don’t make a deal, we’ll just set the number,” he said. “We’re going to the golden age. ..There will never be a time like this, in my opinion. And China wants to be a part of that too.”
Update, April 22, 2025: This article has been updated to include comments from President Donald Trump.