Scott Hints at Trade Truce, Markets See Hope

"US Signals Shift on Tariffs, Raising Hopes for Global Trade Stabilisation"

In what may mark a pivotal turn in global trade dynamics, US Treasury Secretary Scott Bessent has declared the ongoing trade war between the United States and China “unsustainable”, offering markets and multilateral trade actors a signal of potential de-escalation after years of tariff-driven tensions.

Speaking at a private financial forum in Washington, Bessent outlined the disproportionate economic toll of the current tariff regime—145% duties on Chinese exports to the US, and 125% on American goods entering China—characterising the state of bilateral trade as tantamount to a “mutual embargo”. His remarks, although delivered in a closed-door session, have swiftly reverberated through the corridors of international finance and diplomacy.

The affirmation that the world’s two largest economies may seek a path towards easing trade hostilities comes as a relief to global investors and manufacturers alike. Since the initial wave of tariffs introduced under President Donald Trump’s administration, global supply chains have suffered repeated disruptions, and emerging markets have borne the brunt of reduced trade volumes and heightened volatility. The ripple effect has extended well beyond China and the US, dampening investment sentiment worldwide.

Bessent’s acknowledgment that current conditions are unsustainable introduces a more conciliatory note into what has been, until now, a highly adversarial trade posture. Notably, he indicated that a comprehensive trade agreement might be within reach in the next two to three years—an ambitious, if cautiously optimistic, horizon that suggests a willingness within the US administration to gradually unwind the punitive measures.

Though negotiations with Beijing have reportedly not yet resumed in earnest, the mere suggestion of re-engagement has helped buoy investor confidence. Stock markets, which had been under sustained pressure from protectionist rhetoric and erratic policy shifts, rallied on the back of Bessent’s comments. Analysts suggest that the removal—or even reduction—of tariffs could revive cross-border trade orders that had been suspended, and restore trust in a rules-based global trading system.

The Treasury Secretary's message stands in contrast to the more hawkish tone that has frequently emerged from the White House in recent months. President Trump has continued to insist that the US is “doing fine” with China and dismissed any notion of striking a hard bargain. However, behind closed doors, signs of a softening stance are emerging, with multiple reports indicating that Washington is exploring new trade agreements not only with Beijing, but also with Tokyo and New Delhi.

The global business community will be closely watching the upcoming spring meetings of the International Monetary Fund and the World Bank for further clues on whether the US intends to pivot towards multilateral cooperation, or if the administration’s approach will remain anchored in bilateralism and economic nationalism.

Bessent’s statements, though cautious, represent a potential inflection point. They underscore the reality that economic interdependence between the US and China is too deeply entrenched to be unwound without serious collateral damage. A shift towards stabilisation, even if gradual, could breathe new life into a global trade system battered by years of uncertainty, reestablishing confidence in the principles of open commerce and strategic diplomacy.

As the world’s two largest economies edge towards re-engagement, the focus must now turn to whether rhetoric will be matched by action—and whether the scars of the tariff war can be healed through pragmatic policymaking and mutual economic interest.

The US-China trade war, now stretching into its seventh year, remains one of the defining features of modern economic geopolitics. Initiated in 2018 under the Trump administration, the tariff dispute was originally aimed at addressing intellectual property concerns, market access, and the structural trade imbalance. Over time, it evolved into a broader strategic rivalry, extending beyond trade into technology, investment, and industrial policy.

As of 2025, punitive tariffs remain deeply entrenched—145% on Chinese exports to the US, and 125% on American goods entering China. These extraordinary levels of taxation have strained businesses on both sides and distorted global trade flows, with multinational firms rerouting supply chains and diversifying sourcing strategies to mitigate risk.

Despite intermittent talks and partial agreements, a comprehensive settlement has proved elusive. However, recent comments from US Treasury Secretary Scott Bessent, signalling that the current arrangement is “unsustainable”, suggest that both Washington and Beijing may be approaching a point of recalibration. The prolonged conflict has not only stifled global trade growth but has also eroded investor confidence in the predictability of cross-border commerce.

As the world economy grapples with post-pandemic recovery, inflationary pressures, and geopolitical fragmentation, a genuine thaw in US-China trade relations could offer much-needed stability and signal a shift towards pragmatic economic diplomacy.