Bessent’s remarks, made in a closed-door meeting with investors, indicate a potential de-escalation in tensions that have seen tariffs on imports reach unprecedented levels.
Bessent said he was hopeful that the tariff battle would soon de-escalate. This very rosy view on the future led to a major increase in stock prices immediately after the reported announcement. Investors cheered his comments that both parties understand the status quo is not sustainable. He stated, “The next steps with China are, no one thinks the current status quo is sustainable.”
These tariffs have drastically changed our trade relations, with the U.S. slapping tariffs as high as 145% on Chinese imports. In response, China has placed retaliatory tariffs of 125% on US products. At the same time, non-Chinese investors are already spooked by the sustainability of such steep tariffs. They expressed concern about increasing risk on individual stocks.
Bessent underscored that President Trump’s policy is to get a more balanced approach to trade. The aim is not to cut off the U.S.’s relationship with China. He noted that the prospect of de-escalation “should give the world, the markets, a sigh of relief,” reflecting a broader expectation of stabilization in international trade relations.
For now, Bessent is happy and hopeful, but he cautions that changes in tariff policies could introduce unanticipated dangers. Indeed, these risks could disproportionately affect certain sectors and stocks. Uncertainty from tariff negotiations weighed on economic activity. Bessent’s remarks underscore that both countries are ready to participate in a serious and constructive conversation.
Bessent met with the media after his speech, pictured here with Leah Millis of Reuters. Most encouragingly, perhaps, he reaffirmed the administration’s intention to achieve their desired trade reforms without a full decoupling from China.
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