U.S. Treasury Secretary Scott Bessent said in a speech Tuesday that the ongoing tariff dispute with China can’t continue and he expects things to calm down between the two countries.
However, in a private talk in Washington for JPMorgan Chase, Bessent warned that official talks between the U.S. and China haven’t started yet. President Donald Trump has placed a 145% tax on Chinese imports, and China has responded with 125% tariffs on U.S. goods. Trump has applied tariffs to many other countries too, which has caused stock markets to fall and interest rates on U.S. debt to rise, as investors worry about slower growth and higher inflation.
Two people familiar with the speech confirmed the details but asked not to be named.
“I do say China is going to be a slog in terms of the negotiations,” Bessent said, according to a transcript obtained by The Associated Press. “Neither side thinks the status quo is sustainable.”
The S&P 500 stock index jumped 2.5% after Bloomberg News first reported Bessent’s comments.
Trump later told reporters he noticed the stock market’s rise but did not say whether he agreed with Bessent’s view that the current situation with China couldn’t last.
“We’re doing fine with China,” Trump said.
Despite the steep tariffs, Trump said he would treat China well and not be too tough with President Xi Jinping.
“We’re going to live together very happily and ideally work together,” Trump said.
Trump added that the final tariff rate with China would be much lower than the current 145%.
“It won’t be that high, not going to be that high,” Trump said.
Donald Trump in the Oval Office of the White HouseThe Trump administration has held trade discussions with Japan, India, South Korea, the European Union, Canada, and Mexico, among others. But Trump has not shown any public plans to remove the 10% base tariff he set, even though he has said he wants other countries to lower their import taxes and drop trade rules that make it hard for U.S. businesses to sell abroad.
On Monday, China warned other countries not to make trade deals with the U.S. that could hurt China.
“China firmly opposes any party reaching a deal at the expense of China’s interests,” China’s Commerce Ministry said in a statement.
White House press secretary Karoline Leavitt said the Trump administration has received 18 offers from other countries for trade agreements and that “everyone involved wants to see a trade deal happen.”
The uncertainty over tariffs in financial markets has grown because Trump has also pushed the Federal Reserve to lower its key interest rate, saying he could fire Fed Chair Jerome Powell if he wanted.
Leavitt said Trump thinks the Fed is keeping rates steady for political reasons, not because it’s best for the economy.
Trump later said he wanted Powell to act early in cutting rates and that he does not plan to remove him, despite earlier saying he might.
