Treasury Secretary Scott Bessent said Wednesday that there was an opportunity for a deal with China in a further softening of the Trump administration’s trade stance that has led to a huge market rally over the past two days.
“There is an opportunity for a big deal here,” he said.
Such a deal would be based on more domestic production in the U.S. along with lower import consumption, paired with less export-based production in China along with more domestic consumption of Chinese products.
“The U.S. is looking to rebalance to more manufacturing. The identity of that would be less consumption. If Chinese is serious on less dependence on export-led manufacturing growth and a rebalancing toward a domestic economy … If they want to rebalance, let’s do it together,” he said.
Bessent sparked a huge stock market rally on Tuesday after a closed-door meeting he took with investors in which he described the current trade standoff with China as “unsustainable,” according to reporting by Bloomberg News and CNBC.
The rally continued into Wednesday with the Dow Jones Industrial Average of big U.S. companies jumping more than 1,000 points during the morning trading session.
In a series of escalations starting on April 2, the Trump administration raised tariffs on China to 145 percent, which prompted retaliatory tariffs from China to comparable levels.
Trump has allowed for some exemptions to those tariffs — notably in the electronics sector —but the sky-high import taxes have led to a near standstill in trade with one of the top U.S. trading partners.
The overall U.S. tariff rate has risen above 25 percent, according to the International Monetary Fund. That’s the highest level in more than a century, higher than the Smoot-Hawley tariff level in 1930.
President Trump took a meeting with retail CEOs this week in which they reportedly warned the president of empty shelves resulting from falling trade volumes.
Shippers and port operators have been warning of dropping import volumes for some weeks.
“The reports I’ve been getting out of China and Southeast Asia … is that some really famous brands have put a pause on shipments for the time being, just as we predicted ten days ago, and that they’re evaluating exactly what these trade lanes are going to look like,” Los Angeles Port director Gene Seroka said earlier this month.”
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