U.S. Treasury Secretary Scott Bessent said in a Tuesday speech that the continuing tariffs showdown against China is unsustainable and he expects a “de-escalation” within the trade war between the world’s two largest economies.
But in a non-public speech in Washington for JPMorgan Chase, Bessent also cautioned that talks between the USA and China had yet to formally start. U.S. President Donald Trump placed import taxes of 145% on China, which has countered with 125% tariffs on U.S. goods.
Trump has placed tariffs on several dozen countries, causing the stock market to stumble and rates of interest to extend on U.S. debt as investors worry about slower economic growth and better inflationary pressures.
Details of Bessent’s speech were confirmed by two people aware of the remarks who insisted on anonymity to debate them.
“I do say China goes to be a slog when it comes to the negotiations,” Bessent said in line with a transcript obtained by The Associated Press. “Neither side thinks the establishment is sustainable.”
The S&P 500 stock index rose 2.5% after Bloomberg News initially reported Bessent’s remarks.
Trump acknowledged the rise within the stock market in remarks to reporters afterward on Tuesday, but he avoided confirming if he, too, thought the situation with China was unsustainable as Bessent had said behind closed doors.
“We’re doing high quality with China,” Trump said.
Despite his high tariffs, Trump said he can be “very nice” to China and never play hardball with Chinese President Xi Jinping.
“We’re going to live together very happily and ideally work together,” Trump said.
The U.S. president said that the ultimate tariff rate with China would come down “substantially” from the present 145%.
“It won’t be that prime, not going to be that prime,” Trump said.
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The Trump administration has met for talks with counterparts from Japan, India, South Korea, the European Union, Canada and Mexico, amongst other nations. But Trump has shown no public indications that he plans to pullback his baseline 10% tariff, whilst he has insisted he’s in search of other nations to chop their very own import taxes and take away any non-tariff barriers that the administration says have hindered exports from the U.S.
China on Monday warned other countries against making trade deals with the USA that might negatively impact China.
“China firmly opposes any party reaching a deal on the expense of China’s interests,” China’s Commerce Ministry said in an announcement.
White House press secretary Karoline Leavitt said the Trump administration has received 18 proposals from other countries for trade deals with the U.S., adding that “everyone involved desires to see a trade deal occur.”
Trump: ‘I actually have no intention’ of firing U.S. Fed chair
The uncertainty over tariffs within the financial markets has also been amplified by Trump calling on the Federal Reserve to chop its benchmark rate of interest, with the president saying he could fire Fed Chair Jerome Powell if he desired to achieve this.
Leavitt said Trump believes the Fed has held rates regular because it awaits the impacts of tariffs “within the name of politics, relatively within the name of what’s right for the American economy.”
Trump later said that he wanted Powell to “be early” in lowering rates and that he has no plan to fireside the Fed chair, despite previously suggesting that he would.
“I actually have no intention of firing him,” Trump told reporters.
Powell has said that Trump’s tariffs are creating uncertainty about slower growth and better inflationary pressures, while the president maintains that inflationary worries are essentially non-existent.
The president maintains that energy and grocery prices are falling, so the Fed should cut its benchmark rates because inflation isn’t any longer a threat to the U.S. economy, Trump said. His remarks indicated that he still plans to make use of the bully pulpit to pressure a U.S. central bank that’s committed to resisting political pressure as a part of its mandate to stabilize prices and maximize employment.
Trump’s frustration led him to post on social media last Thursday: “Powell’s termination cannot come fast enough!”
The Fed chair’s term ends in May 2026.
On Tuesday, Trump continued to air his grievances about Powell, despite the fact that he said the Fed chair would stay on the job despite the president’s belief that inflation isn’t any longer an issue.
“It’s all coming down,” Trump said. “The one thing that hasn’t come down, but hasn’t gone up much, are rates of interest. And we expect the Fed should lower the speed. We expect that it’s an ideal time to lower the speed. And we’d wish to see our chairman be early or on time, versus late. Late’s not good.”
Trump again attacked Powell on Monday on his Truth Social account, saying that “there may be virtually No Inflation.”
The comment built on an announcement by Trump last week that said he believed he could fire Powell, a move that shook financial markets and frightened investors that rates of interest is likely to be subject to politics as an alternative of economic fundamentals.
“If I need him out, he’ll be out of there real fast, imagine me,” Trump said within the Oval Office last Thursday. “I’m not pleased with him.”
The Fed has held off on further reductions to its federal funds rate, which influences the cash supply by setting the rate of interest that banks can charge one another for overnight loans. That rate is effectively 4.33%, down a totally percentage point since last August as inflationary pressures appeared to ease.
The Fed had initially raised that rate due to inflation spiking during Joe Biden’s presidency, a byproduct of the worldwide economy recovering from the COVID-19 pandemic and better energy and food prices after Russia invaded Ukraine in 2022.
But Powell has also been willing to challenge the president’s trade policies. He said last week in a Chicago speech that Trump’s tariff policies would hurt the U.S. economy, a direct warning to a White House attempting to sell the import taxes as a long-term positive for the country.
“The extent of tariff increases announced up to now is significantly larger than anticipated, and the identical is more likely to be true of the economic effects which can include higher inflation and slower growth,” Powell said last week on the Economic Club of Chicago.
