Bessent Predicts De-Escalation in U.S.-China Tariff War

Bessent Predicts De-Escalation in U.S.-China Tariff War \ Newslooks \ Washington DC \ Mary Sidiqi \ Evening Edition \ U.S. Treasury Secretary Scott Bessent warned that the ongoing tariff standoff between the U.S. and China is unsustainable, signaling expectations of eventual de-escalation. Speaking privately in Washington, Bessent also noted that formal negotiations have yet to begin. Markets responded positively, despite continued tariff pressures from President Trump.

Quick Looks

• Treasury Secretary Scott Bessent called the current U.S.-China tariff conflict “unsustainable.”
• Bessent expects a “de-escalation” in tensions, though formal negotiations haven’t begun.
• Trump has imposed 145% tariffs on Chinese imports; China responded with 125% tariffs on U.S. goods.
• The trade war is fueling market volatility, inflation fears, and rising U.S. debt costs.
• Despite negotiations with other allies, Trump has not rolled back baseline tariffs.
• White House insists the U.S. is making progress on multiple trade proposals.
• China warned against deals that undermine its strategic trade interests.
• Trump continues to pressure the Fed, raising concerns about economic independence.

Deep Look

As the global economy grapples with mounting uncertainty, U.S. Treasury Secretary Scott Bessent delivered a candid assessment of the state of the U.S.-China trade war, calling it “unsustainable” and hinting at a future de-escalation, even though formal negotiations between the world’s two largest economies remain stalled.

The comments, made during a private gathering hosted by JPMorgan Chase in Washington, were confirmed by two individuals with direct knowledge of the event, speaking anonymously due to the event’s closed-door nature.

According to a transcript obtained by the Associated Press, Bessent was frank in his analysis:

“I do say China is going to be a slog in terms of the negotiations… Neither side thinks the status quo is sustainable.”

His remarks come amid heightened investor anxiety over intensifying trade barriers, soaring tariffs, and volatile interest rates that have already begun reverberating across global financial markets.

Tariff Showdown: An Escalating Economic Tug-of-War

Since returning to office, President Donald Trump has implemented sweeping tariffs on Chinese goods—reaching up to 145% on certain imports—as part of his aggressive “America First” trade doctrine. China, in turn, has retaliated with 125% tariffs on U.S. exports, targeting agriculture, technology, and key industrial goods.

While the Trump administration has opened discussions with Japan, India, Canada, Mexico, South Korea, and the European Union, no formal talks with China have yet occurred, a fact Bessent emphasized as a critical roadblock to any meaningful resolution.

Despite the stalemate, markets reacted positively to early reports of Bessent’s optimism. The S&P 500 rose modestly following Bloomberg’s coverage of his remarks, signaling investor hopes that progress, however incremental, may be on the horizon.

White House Remains Defiant

White House Press Secretary Karoline Leavitt echoed the administration’s confidence, telling reporters Tuesday that Trump informed her the U.S. is “doing very well” regarding a “potential trade deal with China.” However, she provided no specific timeline or negotiation updates.

Leavitt added that the U.S. has received 18 proposals from other countries seeking trade deals, and that the White House remains open to agreements—provided they prioritize American interests.

But Trump has shown no willingness to ease his base 10% tariffs on multiple nations, despite growing evidence that his strategy is adding pressure to both consumer prices and business costs.

China Pushes Back

In a statement issued Monday, China’s Commerce Ministry warned other nations against striking deals with the U.S. that could compromise Beijing’s strategic interests.

“China firmly opposes any party reaching a deal at the expense of China’s interests,” the statement said.

China’s sharp rebuke reflects growing concerns that the U.S. may attempt to build a coalition of trade allies to isolate Beijing economically, similar to past strategies deployed on issues like cybersecurity and intellectual property.

Economic Uncertainty Grows as Fed Comes Under Fire

Amid the tariff-induced uncertainty, Trump has continued to exert public pressure on the Federal Reserve, accusing the central bank of deliberately stalling interest rate cuts for political reasons.

Trump has even hinted at firing Federal Reserve Chair Jerome Powell, a move that would be legally and politically controversial. He maintains that cutting rates would help offset the drag caused by tariffs and boost domestic economic growth.

“The Fed is acting in the name of politics, not in the name of what’s right for the American economy,” said Leavitt, amplifying Trump’s criticisms.

The rhetoric has alarmed some economists and policymakers, who warn that undermining the Fed’s independence could further rattle markets and weaken global confidence in the U.S. financial system.

What’s Next?

• No date has been set for official U.S.-China trade talks.
• Ongoing tariffs will remain in place unless a new bilateral framework is agreed upon.
• Stock market volatility is expected to continue, especially in export-sensitive sectors.
• Trump’s messaging suggests he views tariffs as long-term leverage, not short-term negotiation tools.
• China is likely to harden its trade positions as it explores alternative global partnerships.

For now, the two economic superpowers remain entrenched in a high-stakes trade standoff—one that has reshaped global markets, strained diplomatic ties, and threatened to redraw international trade alliances.

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