Bessent sees ‘de-escalation’ of US and China trade tensions

Washington — US treasury secretary Scott Bessent said at a JPMorgan conference on Tuesday he believed there would be a de-escalation in US-China trade tensions, but negotiations with Beijing had not yet started and would be a “slog”.

Bessent described the bilateral trade situation as a two-way embargo, and neither side saw the status quo as sustainable, according to a person who heard his closed-door presentation to investors at the conference.

Bessent said the Trump administration’s goal was not to decouple the world’s two largest economies.

Instead, he said he was hoping for a “big, beautiful rebalancing” of China’s economy towards more consumption and the US economy towards more manufacturing, but it was unclear whether Beijing was ready to do that, the source said.

Bessent spoke at the private investment conference held on the sidelines of the IMF and World Bank meetings in Washington. Bloomberg first reported some of his remarks from sources in the room.

The current situation, with 145% US tariffs on Chinese goods and 125% Chinese tariffs on US goods, was unsustainable, he said, adding that a de-escalation would happen over the “very near future” that would provide “a sigh of relief” for markets.

Bessent’s remarks added to positive corporate earnings momentum on Wall Street, which recovered from Monday’s sell-off sparked by US President Donald Trump’s criticism of Federal Reserve chair Jerome Powell.

US stocks rebounded on Tuesday after Bessent’s comments. The S&P 500 gained 129.13 points, or 2.50%, to end at 5,287.33 points, while the Nasdaq Composite gained 429.52 points, or 2.71%, to 16,300.42. The Dow Jones industrial average rose 1,013.56 points, or 2.66%, to 39,183.97.

Gold fell more than 1% on Tuesday after briefly touching a record high of $3,500 earlier in the session on his comments. Spot gold fell 1.5% to $3,372.68/oz.

Bessent also signalled that the Trump administration would be willing to offer Argentina’s government some financial support if a global shock derailed the South American country’s economic recovery, the person said, provided that Javier Milei’s government stayed the course on reforms and difficulties were not Argentina’s fault.

Bessent last week travelled to Buenos Aires to underscore the Trump administration’s support for Argentina’s reforms and new, $20bn loan programme from the IMF.

Reuters