US Treasury Secretary Scott Bessent said at a private event Tuesday that the US-China trade war is unsustainable and that he expects a deescalation, according to people familiar with his remarks.
No one thinks the current status quo is sustainable, Bessent said, according to a person who was in the room during the event, as the secretary cited the sky-high tariffs the US and China have placed on each other.
He posited that in the near future there will be a deescalation between the two largest economies in the world, and that should give the markets some relief.
Bessent’s comments helped lift US stocks after Bloomberg first reported some of what the Treasury secretary said during the closed-door investor summit in Washington, D.C., that wasn’t open to the public.
Bessent on Tuesday added the goal isn’t to decouple from China, according to the person who was in the room, but he acknowledged that negotiations will be a slog.
At the end of the day, though, he said there is a big deal to be done.
The message on China was welcome news for investors still recovering from a bruising day of losses on Monday, spurred by President Trump’s repeated criticisms of Federal Reserve Chair Jay Powell and musings that he may fire the central bank policymaker.
The US and China have been locked in an escalating trade war since Trump announced a heightened set of tariffs on April 2 for countries around the world. While Trump put many of those “reciprocal” tariffs on pause for 90 days, he didn’t do so with China.
Read more: What Trump’s tariffs mean for the economy and your wallet
The US tariffs on Chinese goods now amount to 145%. China, in turn, has raised tariffs on US goods to 125%.
Last Thursday, Trump said a deal with China could be reached in the next three to four weeks.
Bessent on Tuesday said it may be possible to rebalance their relationship over time, according to the account of the person in the room, noting the US wants to increase manufacturing and consume less from China.
A larger deal between the two countries may be possible in two to three years, and that would be a huge win, he said.
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