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A Break in the Trade Storm?

In a private investor summit hosted by JPMorgan Chase alongside the World Bank meetings in Washington, Treasury Secretary Scott Bessent delivered an optimistic signal that the ongoing U.S.-China tariff standoff could soon ease. Speaking behind closed doors to a room of high-level investors on Tuesday, Bessent stated he anticipates a “de-escalation” in the trade conflict between the two superpowers “in the very near future.”

This remark, shared with CNBC by an attendee granted anonymity, triggered a surge in U.S. equities, which had already begun rebounding from the prior day’s sharp sell-off. Markets viewed Bessent’s tone as a rare positive signal amid months of rising economic tension.

“No one believes the current tariff structure is sustainable,” Bessent reportedly told the room, referencing the current import duties of up to 145% on Chinese goods and 125% retaliatory tariffs on U.S. exports.

Trade War Tensions Near Breaking Point

The trade war, initiated under President Donald Trump, has intensified over the past year with both Washington and Beijing implementing multiple rounds of punitive tariffs on hundreds of billions of dollars in goods. According to the U.S. Trade Representative’s office, nearly $550 billion worth of Chinese imports are currently subject to elevated duties.

China has responded in kind, with high tariffs impacting over $185 billion in U.S. exports, from agricultural products to industrial machinery. Many analysts, including those from the Peterson Institute for International Economics, have warned that prolonged trade barriers could shave 0.6% to 1.2% off U.S. GDP growth over the next two years, and even more from China’s.

“We’re not trying to decouple,” Bessent clarified, “but the pressure points are clear. This can't go on forever.”

Markets React as Diplomacy Hangs in the Balance

While Bessent’s remarks were not an official policy shift, the impact was immediate. The Dow Jones Industrial Average rose 290 points within hours of the news breaking, and the S&P 500 gained 1.3%, led by multinational tech and manufacturing firms with heavy China exposure.

White House press secretary Karoline Leavitt reinforced the sentiment during a briefing later that day, noting that President Trump is “setting the stage for a deal with China,” even as formal negotiations have yet to be confirmed.

When asked if Trump had personally spoken to Chinese President Xi Jinping, Leavitt declined to comment but maintained that the “ball is moving in the right direction.”

Why Now? Timing and Political Calculations

Analysts believe that multiple factors are aligning to force movement on both sides:

• Inflation pressures in the U.S. are being exacerbated by higher import costs.
• China’s sluggish post-COVID recovery has prompted Beijing to seek stronger export performance.
• The looming U.S. presidential election may be encouraging the Trump administration to show signs of diplomatic progress.
• Major U.S. corporations, from Apple to Caterpillar, have reportedly increased lobbying efforts in Washington to ease trade constraints.

According to data from the U.S. Chamber of Commerce, American companies have lost over $180 billion in market value since the trade war began, and supply chain disruptions continue to hurt both small businesses and multinational enterprises.

The Path Forward: Optimism, But No Guarantees

Despite the positive rhetoric, Bessent cautioned that negotiations with China remain “a slog,” and insiders do not expect an immediate breakthrough. Yet the recognition — from both sides — that the status quo is untenable suggests momentum is building.

“It’s not about winning or losing anymore,” one JPMorgan strategist at the summit noted. “It’s about survival — economic and political.”

If Bessent’s forecast proves accurate, even a modest easing of tariffs could inject new life into global trade and improve confidence across equity and commodities markets. Until then, investors and policymakers will watch closely for any sign of concrete action.

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