By David Lawder and Trevor Hunnicutt, Reuters
US Treasury Secretary Scott Bessent speaks to reporters outside the White House. Photo: MANDEL NGAN/AFP
- US stocks rally on hopes of tariff reduction
- Trump administration signals willingness to lower China tariffs
- IMF warns tariffs will slow global growth and increase debt
US Treasury Secretary Scott Bessent says high tariffs between the United States and China are not sustainable, as President Donald Trump's administration signals openness to de-escalating a trade war between the world's two largest economies that has raised fears of recession.
On Wednesday, US stocks rallied on hopes that the two countries might lower the steep trade barriers they have erected over the past month, although there was no sign that negotiations might start anytime soon.
Bessent said the tariffs - 145 percent on Chinese products and 125 percent on US products - would have to come down before trade talks could proceed, but said Trump would not make that move unilaterally.
"Neither side believes that these are sustainable levels," Bessent said. "As I said yesterday, this is the equivalent of an embargo and a break between the two countries in trade does not suit anyone's interest.".
The Wall Street Journal reported that the White House is considering cutting tariff levels to as low as 50 percent on Chinese imports in a bid to lower tensions. A White House spokesperson dismissed any reports as "pure speculation" and said news on tariffs would come from Trump himself.
"We are going to have a fair deal with China," Trump said, but did not outline any specifics.
The tariff levels outlined in the Journal report would likely still be high enough to deter a significant chunk of trade between the world's two largest economies.
German shipper Hapag-Lloyd said 30 percent of its US-bound shipments from China had been cancelled.
Separate talks between the two countries over tackling the fentanyl epidemic hadn't yielded results so far, sources said.
The apparent US softening on China tariffs was a welcome sign for markets battered by Trump's erratic trade policies. The benchmark S&P 500 was up 1.85 percent in midday trading, but is still more than 12 percent below its February record close.
"It's about all of the political and policy uncertainty, and what it could mean for the economy in the near term," Jim Baird of Plante Moran Financial Advisors said.
Bessent said the third quarter of this year was a "reasonable estimate" for achieving clarity on the ultimate level of Trump's tariffs. In addition to the steep tariffs on China, Trump also imposed a blanket 10 percent tariff on all other US imports, and higher duties on steel, aluminum and autos.
He suspended targeted tariffs on dozens of other countries until 9 July, and floated additional industry-specific levies on pharmaceuticals and semiconductors. That roiled financial markets and raised fears of recession.
The European Union, which Trump threatened with 20 percent tariffs, would respond with countertariffs, if it could not reach a deal with the United States before the 9 July deadline, Economy Minister Valdis Dombrovskis said on Wednesday.
He said the 27-member trade bloc had offered to buy more liquid natural gas from the United States and reduce tariffs on certain goods. Other countries were looking to negotiate as well.
Vietnam's trade minister spoke to US Trade Representative Jamieson Greer on Wednesday, state media reported.
The International Monetary Fund said the tariffs would slow growth and push debt higher across the globe. S&P Global found that US business activity slowed to a 16-month low in April, while prices charged for goods and services soared.
-Reuters
