In a surprising turn of events, US President Donald Trump has indicated a potential reversal in his aggressive stance regarding the ongoing trade war with China. During a White House news event on Tuesday, Trump stated that the high tariffs imposed on Chinese goods would “come down substantially, but it won’t be zero.” This statement marks a notable shift from his previous tough posturing and the escalating tit-for-tat tariffs that have surged beyond a staggering 145%.
During a question-and-answer session with reporters in the Oval Office, Trump acknowledged the burdensome nature of the current tariffs. “145% is very high and it won’t be that high,” he remarked. “It’ll come down substantially. But it won’t be zero.” His comments were prompted by inquiries regarding remarks made by Treasury Secretary Scott Bessent, who suggested that the elevated tariff rates between the United States and China have created an effective embargo on trade.
At a private investment conference hosted by JP Morgan Chase, Bessent expressed his view that the ongoing trade conflict is unsustainable and anticipated a de-escalation in the near future. Instead of a complete economic decoupling, Bessent emphasized the objective of achieving a rebalancing of trade between the US and China. His assessment contributed to a significant surge in the stock market, with all three major US stock indexes reaching their highest levels of the day following his remarks.
In response to the shifting dynamics of the trade war, Asian stocks also experienced a boost, with Hong Kong’s Hang Seng Index leading the gains, closing 2.5% higher. Japan’s Nikkei 225 rose approximately 2%, while South Korea’s Kospi increased by 1.5%. The escalating tariffs between the world’s two largest economies have disrupted global markets and supply chains, raising concerns about a potential recession.
Despite Trump's hopeful statements, China has maintained a defiant stance throughout the trade war, retaliating by raising tariffs on US goods to 125%. Beijing has also added more American companies to its export control lists and restricted the export of critical minerals essential for various industries, from consumer electronics to defense.
Trump has consistently claimed to have a “very good relationship” with Chinese President Xi Jinping, expressing a desire for Xi to initiate contact for negotiations. However, instead of reaching out to Trump, Xi has been actively engaging in a diplomatic charm offensive with other trade partners to mitigate US efforts to economically isolate China. On Tuesday, Trump reiterated his hope for Xi to come to the negotiation table, promising to “be very nice.”
When questioned about the possibility of a hardline approach in negotiations or mentioning the Covid-19 pandemic, Trump firmly stated, “No, we’re going to be very nice.” He emphasized that both nations need to reach an agreement for continued business interactions, asserting, “Ultimately, they have to make a deal, because otherwise they’re not going to be able to deal in the United States.”
China has expressed its willingness to engage in trade negotiations, provided that discussions are conducted on equal terms, emphasizing the need for “respect,” “consistency,” and “reciprocity” from the Trump administration. Prior to the announcement of Trump’s “Liberation Day” tariffs on April 2, China had even designated a point person for talks, although there remains uncertainty about the appropriate contacts on the US side.
While Trump may prefer to negotiate directly, his approach appears to conflict with China’s diplomatic norms. Observers note that Trump’s failure to counteract the hawkish views expressed by some of his Cabinet members suggests a tacit approval of their stance, even as he publicly claims to respect and maintain a positive relationship with Xi.
