By Matt Peterson and Janet H. Cho
Treasury Secretary Scott Bessent expects the U.S. and China to begin de-escalating their trade hostilities in the "very near future," he said at an event in Washington, D.C., on Tuesday organized by JPMorgan, a person in the room told Barron's.
Stocks have fallen sharply in the wake of President Donald Trump's decision to impose tariffs of up to 145% on China; China has retaliated with its own 125% tariffs. The $S&P 500 Index (.SPX.US)$ fell 8% since the beginning of April through Monday's close, though stocks have been rising today.
Those tariffs are "an embargo on both sides" that effectively ends trade between the U.S. and China, Bessent said, according to the person.
But Bessent added that the goal isn't for the U.S. and China to decouple their economies. Rather, he believes the unsustainable tariff situation is likely to drive both the U.S. and China to recalibrate their trade relationship. That would begin a potentially difficult set of negotiations.
Markets would welcome a successful start to trade talks between the U.S. and China that lowered the political temperature. But engagement with China has yet to begin, Bessent said, according to the person.
The U.S. faces complicated negotiations with as many as 90 trading partners. White House press secretary Karoline Leavitt said on Tuesday that "18 proposals on paper" have been brought to the administration's trade team, a group that includes Bessent, Commerce Secretary Howard Lutnick, National Economic Council Director Kevin Hassett, and senior trade adviser Peter Navarro. The team is meeting with 34 countries this week.
When asked specifically about China, Leavitt said the administration is "setting the stage for a deal with China" and that "the ball is moving in the right direction."
Investors' expectations that the talks may be prolonged, especially with major trading partners such as China, the European Union, and Japan, have led to downgraded growth negotiations and worries about a potential recession.
Finance ministers from around the world are meeting in Washington this week for the spring meetings of the International Monetary Fund and World Bank. The JPMorgan event where Bessent spoke was organized on the sidelines of those talks. Investors see the week as a crucial moment for Bessent and others in the administration to show that they are making progress.
Bloomberg reported Bessent's comments earlier Tuesday.
Write to Matt Peterson at matt.peterson@dowjones.com and Janet H. Cho at janet.cho@dowjones.com
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