U.S. Treasury Secretary Scott Bessent said on Wednesday that high tariffs between the United States and China are not sustainable, as President Donald Trump's administration signaled openness to de-escalating a trade war between the world's two largest economies that has raised fears of recession.
Bessent said the tariffs -- 145% on Chinese products and 125% on U.S. products -- would have to come down before trade talks can proceed, but said Trump would not make that move unilaterally.
"Neither side believes that these are sustainable levels. 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," Bessent told reporters.
The White House is open to discussing a significant rate cut on Chinese imports in order to advance negotiations with Beijing but will not do so alone, according to a person familiar with the conversations. That person would not say how low the White House might be willing to go, but the Wall Street Journal reported the figure could be as low as 50%.
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 told reporters, 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 Wednesday that 30% of its U.S.-bound shipments from China have been cancelled.
Separate talks between the two countries over tackling the fentanyl epidemic have not yielded results so far, sources say.
The apparent U.S. softening on China tariffs was a welcome sign for markets battered by Trump's erratic trade policies. The benchmark S&P 500 was up 2.11% in midday trading, but is still more than 12% 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," said Jim Baird of Plante Moran Financial Advisors.
Bessent said the third quarter of this year is a "reasonable estimate" for achieving clarity on the ultimate level of Trump's tariffs.
In addition to the steep tariffs on China, Trump has also imposed a blanket 10% tariff on all other U.S. imports and higher duties on steel, aluminum and autos. He has suspended targeted tariffs on dozens of other countries until July 9 and floated additional industry-specific levies on pharmaceuticals and semiconductors. That has roiled financial markets and raised fears of recession.
The European Union, which Trump has threatened with 20% tariffs, would respond with countertariffs if it cannot reach a deal with the United States before the July 9 deadline, economy minister Valdis Dombrovskis said on Wednesday. He said the 27-member trade bloc has offered to buy more liquefied natural gas from the United States and reduce tariffs on certain goods.
Other countries are looking to negotiate as well. Vietnam's trade minister spoke to U.S. Trade Representative Jamieson Greer on Wednesday, state media reported.
The Federal Reserve said it found economic activity in the United States to be steady over the past month, despite "pervasive" uncertainty around trade. The central bank's survey found a drop in international visitors in some areas, and the outlook in several of the Fed's 12 regional districts "worsened considerably."
A Reuters/Ipsos poll found Americans souring on Trump's economic performance. Just 37% of respondents approve of his handling of the economy, down from 42% when he took office in January.
(This story has been refiled to remove hyperlinks in paragraphs 7, 8, 16, and to correct the spelling of 'performance' in paragraph 18)
