Robert Delaney, Khushboo Razdan, Igor Patrick
Apr 22, 2025
Negotiations with Beijing have yet to start, Scott Bessent adds, voicing belief in a possible deal as markets surge on report
US Treasury Secretary Scott Bessent told a closed-door investor summit on Tuesday that President Donald Trump’s tariff war with China has led to an unsustainable, two-way “embargo” and that he expected the situation to de-escalate.
Bessent also said in the session on the sidelines of the International Monetary Fund and World Bank’s spring meetings, hosted by JPMorgan Chase, that negotiations with Beijing had not started but that a deal was possible, according to an attendee.
“No one thinks the current status quo is sustainable, at 145 and 125 [per cent], so I would posit that over the very near future, there will be a de-escalation,” he said referring to the top end of most of the tariffs that Trump has put on imports from China and vice versa, respectively. “We have an embargo now on both sides.”
“China is going to be a slog in terms of the negotiations, because that engagement started … not yet,” he added. “But I think, again, I think neither side thinks the status quo is sustainable.”
Bessent’s comment that negotiations had not yet started differed from Trump’s own take last week, when he said “top officials” from Beijing were talking with their Washington counterparts and expressed confidence that a deal on tariffs would be reached soon.
Chinese officials had reached out “a number of times”, Trump told reporters in the Oval Office on April 17, adding that the two sides had held good trade talks but that more remained, though he offered no evidence of any progress.
Asked about his treasury secretary’s remarks on Tuesday, Trump offered a somewhat contradictory response, saying “we’re doing fine with China”.
While ruling out playing “hardball” with Beijing, Trump said the US would “set the deal”.
“Ultimately, they have to make a deal because otherwise they’re not going to be able to deal in the United States and we want them involved,” he said.
Trump added that Beijing would not be establishing the terms for a deal and that the US – led by Bessent, Commerce Secretary Howard Lutnick and the president himself – would “be setting the deal and it will be a fair deal for everybody”.
Bessent’s comments, first reported by Bloomberg, helped to send US stocks rocketing. The tech-heavy Nasdaq, the S&P 500 and the Dow Jones Industrial Average all closing more than 2.5 per cent higher.
His observations and their effect on the equity markets underscored the extent to which the world’s economy is riding on negotiations between Washington and Beijing, which account for about 43 per cent of the global gross domestic product when combined, according to the World Bank.
Earlier on Tuesday, the IMF cut its 2025 GDP growth forecast for the US deeper than that of China, as the tit-for-tat retaliations between the world’s two largest economies risk a prolonged decoupling.
The US economic growth rate is projected to be 1.8 per cent this year, down 0.9 percentage points from January’s forecast.
The lowered estimates come as the trade wall that Trump has been erecting since he started his second term, including his so-called “reciprocal” tariffs, have roiled financial markets while weighing heavily on the global economic outlook.
The president paused the new levies on imports from most trading partners for 90 days and allowed an exemption on smartphones and other consumer electronics, but kept the rest of them in place on imports from China.
Shortly after the exemption on electronics came to light, Lutnick said a new tariff category for imports of these products, many of which come from China, would be announced in the coming weeks, keeping a cloud of uncertainty over the markets.
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