Treasury Secretary says current tariff regime is unsustainable as White House hints at broader trade negotiations
US Treasury Secretary Scott Bessent said Tuesday that the trade war between the United States and China is “unsustainable” and predicted a “de-escalation” of tariffs in the “very near future,” triggering a broad rally across global markets.
Speaking privately to investors at a JPMorgan-hosted summit in Washington on the sidelines of the World Bank and IMF spring meetings, Bessent characterised current tariff levels—145% on Chinese imports and 125% on American goods—as tantamount to a bilateral embargo. “No one thinks the status quo is sustainable,” he said, according to attendees, adding that the ultimate goal of the Trump administration is not to decouple the world’s two largest economies.
Though formal negotiations have not yet begun, Bessent said he was “optimistic” that tensions would ease in the months ahead. “This should give the world, the markets, a sigh of relief,” he said, while warning that a full-scale agreement could still take two to three years.
His remarks were echoed by White House Press Secretary Karoline Leavitt, who said the US was “doing very well in respect to a potential trade deal with China.” President Donald Trump, asked about Bessent’s comments later that day, said he did not anticipate “hardball” talks with Beijing and predicted that the final tariff level would not remain near current extremes.
Market reaction and political context
Bessent’s comments prompted a strong rebound in equity markets. The S&P 500 closed up 2.5% on Tuesday, while the Nasdaq gained 2.7%. Brent crude rose 1.5% to US$67.27 per barrel, and the US Dollar Index climbed 0.7%. Bond yields fell as inflation fears eased. Gold, which earlier touched a record US$3,500 per ounce, slipped 1.4% to US$3,375.
Investors interpreted Bessent’s tone as a signal that the administration was preparing the ground for a more pragmatic approach, after months of aggressive tariff escalations that had rattled markets and strained supply chains. “Bessent is stating an obvious fact,” said Steven Blitz of TS Lombard. “This is all messaging to hold the markets together while these negotiations are ongoing.”
Yet despite the rhetoric, multiple sources confirmed that no formal discussions between Washington and Beijing are currently underway. Some White House officials and external analysts warned that markets may be reading too much into the Treasury Secretary’s language, noting that neither side appears close to meaningful concessions.
Beijing has signalled that it views the US’s approach as economic coercion and is unlikely to negotiate under pressure. A person familiar with the Chinese position said that “China will not capitulate,” especially with tariffs still in place and no sign of reciprocal goodwill.
Trade outlook beyond China
The optimism surrounding US-China relations comes as the Trump administration ramps up efforts to secure broader trade deals. Leavitt told reporters that the White House was in discussions with 34 countries this week and had received 18 new trade proposals. While no binding deals have been announced, framework agreements with Japan and India are reportedly near, though they may amount to little more than declarations of intent.
“There is an eagerness to demonstrate progress,” said one former trade official, “but it’s unclear whether the substance will follow.”
Separately, Treasury Secretary Bessent is scheduled to deliver a keynote address Wednesday at the Institute of International Finance, where he is expected to outline his broader view of global economic realignment and its implications for US financial stability.
