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On Tuesday, U.S. Treasury Secretary Scott Bessent expressed concerns about the unsustainable nature of the ongoing trade war between the U.S. and China, emphasizing the necessity for both nations to reduce tensions. His comments provided a boost to financial markets that are hopeful for a resolution to the trade dispute.
Bessent conveyed his expectations that Washington and Beijing would finalize an agreement in the near future during a private conference hosted by JPMorgan in Washington, as reported by several sources familiar with his statements.
However, some of those informed about the remarks noted that the market’s optimistic response might be premature, highlighting Bessent’s clarification that no active trade negotiations were ongoing between the two governments. Bessent acknowledged that potential negotiations with China would be challenging.
The trade conflict has intensified, with the U.S. imposing a 145 percent tariff on Chinese goods, while China retaliated with a 125 percent tariff on American imports. Bessent argued, “No one thinks the current status quo is sustainable at 145 and 125 percent,” according to a conference attendee.
Bessent suggested that a de-escalation was likely in the near future, which might provide relief to global markets. He also noted a significant decline in shipping container bookings, emphasizing that the aim was not to decouple the two economies.
Following his comments, the S&P 500 closed 2.5 percent higher, and the Nasdaq Composite rose by 2.7 percent. Despite this, neither substantive trade talks nor progress have occurred between the U.S. and China. President Trump believes that the administration is performing well towards a potential trade agreement.
Meanwhile, President Trump reiterated later on Tuesday his commitment to reaching a deal with China, stating that tariffs would significantly decrease. He expressed confidence that the outcome would be favorable, although there are currently no indications of impending negotiations.
President Trump prefers direct engagement with President Xi Jinping, but Beijing remains wary of initiating contact or holding meetings until a framework for a potential trade agreement is established.
