US Treasury chief expects China tariff impasse to de-escalate

WASHINGTON:

The trade standoff between Washington and Beijing is not sustainable, US Treasury Secretary Scott Bessent said Tuesday, predicting the tit-for-tat tariff war would de-escalate soon.

Speaking at a closed-door event hosted by JPMorgan Chase, Bessent said the enormous tariffs the world's two biggest economies placed on each other's imports amounted to a reciprocal trade embargo.

Bessent was referring to new duties Washington and Beijing have imposed this year. Since Donald Trump's White House return in January, the United States has slapped additional tariffs of 145 percent on many products from China.

These include duties initially imposed over China's alleged role in the fentanyl supply chain and later, over practices Washington deemed as unfair.

Beijing has responded with sweeping counter tariffs of 125 percent on US goods, in retaliation against Washington's latest salvo.

Bessent told the event Tuesday that he expects a de-escalation in the near future, according to a person who was in the room. He noted that the current trade embargo involves both sides.

Such a development should bring markets some relief, he added at the event, which was not open to media.

Wall Street's major indexes jumped after a news report on Bessent's comments at the event, which took place on the sidelines of the International Monetary Fund and World Bank's Spring Meetings.

Bessent said there is much to be done at the end of the day with Beijing. But he noted the need for fair trade and said that China needs to rebalance its economy.

The Treasury chief stressed that the goal is not to decouple with China, adding that Washington wants to stay engaged -- in a manner it considers more fair.

He noted that container bookings between both countries have slumped recently as trade tensions heated up.

Bessent acknowledged that negotiations with China will likely be tough, however, although reiterating that neither side believes the current situation can carry on indefinitely.

On Tuesday, White House Press Secretary Karoline Leavitt told reporters that Washington is "doing very well in respect to a potential trade deal with China."

"The president and the administration are setting the stage for a deal," she added, noting that "the ball is moving in the right direction."