Trade tensions between US and China will calm down, says Bessent

WASHINGTON: Trade tensions between the US and China may soon start to calm down, according to US Treasury Secretary Scott Bessent. 

Speaking at a private investor event in Washington, Bessent said that while talks with Beijing haven't yet begun, both sides know the current situation can't continue — even though any deal will take time and effort, according to someone who heard him speak at a private meeting with investors during a JP Morgan conference.

Bessent described the current bilateral trade situation as a two-way embargo, and neither side sees the status quo as sustainable, the person said.

Bessent added that the Trump administration's goal was not to decouple the world's two largest economies.

Instead, Bessent said that 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 to a private investment conference in Washington held by JP Morgan Chase on the sidelines of the International Monetary Fund and World Bank Spring Meetings. Bloomberg first reported some of his remarks from sources in the room.

Bessent said that the current situation, with 145% US tariffs on Chinese goods and 125% Chinese tariffs on US goods, was unsustainable, saying that a de-escalation would happen over the "very near future" that would provide "a sigh of relief" for markets, the person said.

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. Major US stock indexes were up more than 2% in afternoon trade.

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, $20 billion loan programme from the IMF.