US Treasury Secretary Bessent sees de-escalation with China – Bloomberg

Christian Borjon Valencia FXStreet

The United States (US) Treasury Secretary Scott Bessent commented that the tariff standoff with China is unsustainable and that he expects a de-escalation of the situation.

Bessent said that although negotiations had not started, a deal is possible, as suggested by people who attended a private event by JP Morgan Chase & Co. in Washington.

Financial markets reaction to Bessent comments

The DJIA has risen over 1,000 points to 39,200 as risk appetite improved. Gold prices tumbled below $3,400, down more than 1%, and the US Dollar gained over 0.39%, according to the DXY, which is up at 98.70.

In the FX space, the EUR/USD fell below 1.1450, down 0.4% and the GBP/USD stays below 1.3360 down 0.15%.

Gold daily chart

US-China Trade War FAQs

What does “trade war” mean?

Generally speaking, a trade war is an economic conflict between two or more countries due to extreme protectionism on one end. It implies the creation of trade barriers, such as tariffs, which result in counter-barriers, escalating import costs, and hence the cost of living.

What is the US-China trade war?

An economic conflict between the United States (US) and China began early in 2018, when President Donald Trump set trade barriers on China, claiming unfair commercial practices and intellectual property theft from the Asian giant. China took retaliatory action, imposing tariffs on multiple US goods, such as automobiles and soybeans. Tensions escalated until the two countries signed the US-China Phase One trade deal in January 2020. The agreement required structural reforms and other changes to China’s economic and trade regime and pretended to restore stability and trust between the two nations. However, the Coronavirus pandemic took the focus out of the conflict. Yet, it is worth mentioning that President Joe Biden, who took office after Trump, kept tariffs in place and even added some additional levies.

Trade war 2.0

The return of Donald Trump to the White House as the 47th US President has sparked a fresh wave of tensions between the two countries. During the 2024 election campaign, Trump pledged to impose 60% tariffs on China once he returned to office, which he did on January 20, 2025. With Trump back, the US-China trade war is meant to resume where it was left, with tit-for-tat policies affecting the global economic landscape amid disruptions in global supply chains, resulting in a reduction in spending, particularly investment, and directly feeding into the Consumer Price Index inflation.

Author

Christian Borjon Valencia

FXStreet

Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.

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