Treasury Secretary Scott Bessent has signaled that the current trade war with China is "unsustainable," emphasizing the need for mutual de-escalation rather than unilateral action from the United States.1 Speaking at the Institute of International Finance in Washington, Bessent expressed optimism about the potential for a "big deal" with China if Beijing commits to rebalancing its economy away from export-led manufacturing growth toward more domestic consumption.23 "If China is serious on less dependence on export-led manufacturing growth and a rebalancing toward a domestic economy... and if they want to rebalance, let's do it together. This is an incredible opportunity," Bessent remarked.2

The Treasury Secretary's comments come amid market rallies fueled by hopes of reduced trade tensions, with U.S. stocks surging after President Trump indicated tariffs would "come down substantially" from their current 145% level.45 While Bessent has acknowledged that any negotiations would not begin at the highest levels between Trump and Xi Jinping, he suggested both sides are "waiting to speak to the other" about potential tariff reductions.1 His statements reflect the administration's broader goal of reorienting the U.S. economy toward more manufacturing while encouraging China to shift its economic model—a change he argues would benefit both nations.6

The trade war between the United States and China reached unprecedented levels in April 2025 when China raised its retaliatory tariffs on all U.S. goods to 125%. This dramatic escalation came in direct response to President Trump's decision to increase tariffs on Chinese imports to 145%12. China's State Council Tariff Commission announced the 125% rate would take effect on April 12, 2025, replacing the previous 84% tariff implemented just days earlier34.

In its announcement, Beijing took an unusually defiant stance, stating that "at the current tariff level, there is no market acceptance for U.S. goods exported to China" and that if the United States continued to impose new tariffs, "China will ignore it"4. Chinese officials characterized Washington's escalating tariffs as becoming "a joke in the history of world economy"5, while President Xi Jinping emphasized that "there are no winners in a tariff war"2. The retaliatory measures have severely impacted U.S. exports to China, particularly affecting American agriculture, oilseeds, grains, and energy sectors that previously supported nearly one million American jobs6.

In a significant policy shift, President Trump announced that the 145% tariffs currently imposed on Chinese imports will be "substantially" reduced, though not eliminated entirely. "145% is very high and it won't be that high," Trump told reporters in the Oval Office. "It won't be anywhere near that high. It'll come down substantially. But it won't be zero."12 This announcement came shortly after Treasury Secretary Scott Bessent characterized the ongoing tariff standoff with China as "unsustainable" during a private JPMorgan event in Washington.34

The White House is reportedly considering slashing the baseline tariff rate from 145% to between 50% and 65%, with a possible "tiered approach" that would impose 35% tariffs on non-security-critical goods while maintaining rates starting at 100% for items deemed "strategic to America's interests."5 Trump expressed optimism about future negotiations, stating, "We're going to be very nice and they're going to be very nice, and we'll see what happens,"1 though he maintained that China would ultimately "have to make a deal" to continue accessing U.S. markets.6 The announcement triggered a stock market rally as investors responded positively to signs of potential de-escalation in the trade war between the world's two largest economies.5