Containers at the Yantian port in Shenzhen, Guangdong province, China, on April 17.Tingshu Wang/Reuters
Beijing has welcomed signs the U.S. is second-guessing its aggressive approach to China, following weeks of escalating reciprocal tariffs and bilateral tensions.
Markets were buoyed Tuesday on remarks U.S. Treasury Secretary Scott Bessent made to a private investment conference in Washington, in which he predicted a U.S.-China trade deal in the “very near future,” saying “neither side thinks the status quo is sustainable.”
Asked about Mr. Bessent’s comments later in the day, President Donald Trump said the current 145 per cent tariff on all Chinese goods will “come down substantially,” the latest dramatic U-turn in his global trade war.
At a regular news conference Wednesday, Chinese Foreign Ministry spokesman Guo Jiakun reiterated Beijing’s long-standing point that “there are no winners in a tariff war or a trade war.”
“China’s attitude is very clear,” Mr. Guo said. “We do not want to fight, but nor are we afraid to. If forced to fight, we will do so to the end. When it comes to talks, our door is wide open.”
In his remarks to investors, Mr. Bessent predicted negotiations with Beijing “will be a slog,” but said that, nevertheless, “over the very near future, there will be a de-escalation, and I think that should give the world, the markets, a sigh of relief.”
Indeed it did, with the S&P 500 stock index rising 2.5 per cent and Asian markets trading upwards on Wednesday on reports of Mr. Bessent’s speech.
The President was also more optimistic than his Treasury Secretary, saying he believed a trade deal could happen “pretty quickly,” adding he would not “play hardball” during negotiations.
“They’re gonna do very well, and I think they’re going to be happy, and we’re gonna live together very happily and ideally work together,” he said.
During Mr. Trump’s first term, the U.S. and China spent months negotiating a phase one trade deal, which was never fully implemented, with Washington instead slapping tariffs on many Chinese goods, sparking a trade war.
That dispute was nothing compared to the escalation seen since January, however, with both sides ratcheting up reciprocal tariffs to the point where a full economic decoupling seemed inevitable.
Throughout, Mr. Trump had encouraged China to come to the table, even suggesting Chinese leader Xi Jinping was keen to make a deal, but Beijing showed no signs of blinking, publicly dismissing the threat of U.S. tariffs and seeking to build ties with partners in Europe and Southeast Asia. This approach was bolstered by Mr. Trump’s “Liberation Day” tariffs on almost every country in the world, which alienated U.S. trading partners, helping China advance itself as the more responsible global player.
When Washington paused most tariffs, some Trump administration officials tried to paint the move as a deliberate tactic to isolate China, and Beijing did show some concern that countries would agree to tariff Chinese goods in return for relief from U.S. measures, warning Monday that “China firmly opposes any party reaching a deal at the expense of China’s interests.”
The costs of Mr. Trump’s global trade war have been piling up in recent weeks, with stocks and U.S. treasuries trading lower and lower, sparking growing criticism, with even some supporters of the President publicly doubting his strategy.
On Tuesday, the International Monetary Fund forecast economic growth will slow to 2.8 per cent this year globally, compared to 3.3 per cent in 2024.
Last week, a group of leading economists published an open letter warning Mr. Trump’s tariffs “have injected uncertainty and chaos into the global economy through wildly fluctuating rates and ever-changing orders,” and represented the “largest tax increase on trade in almost a century.”
That letter – which now has more than 1,500 signatories – was widely reported on in China, where state media has often focused on the cost of Mr. Trump’s measures to U.S. business and consumers, while dismissing any potential risk to the Chinese economy.
Speaking to the state-run Global Times on Wednesday, Bao Jianyun, a professor of international studies at Renmin University in Beijing, said Washington’s “seemingly softening tone underscores that the U.S. tariff policy has shown a significant discrepancy between its actual outcomes and its initial goals.”
Prof. Bao added that Mr. Trump’s frequent flip-flopping on tariffs had reduced his credibility, but said “the U.S. goal of containing and suppressing China will not change.”
Beijing has struggled to establish a reliable back channel with the Trump administration as it had Joe Biden’s, during whose term tensions were often high but talks continued on multiple issues, including topics important to Mr. Trump, such as cracking down on fentanyl.
Mr. Trump’s team reportedly rebuffed an initial reach out by Chinese Foreign Minister Wang Yi, regarding him as not influential enough with Mr. Xi. Beijing has also been offended by public comments from Trump administration officials, including Vice-President JD Vance describing Chinese workers as “peasants.”
Speaking Wednesday, Mr. Guo, the Foreign Ministry official, said any dialogue must be “on an equal footing, with respect and on a mutually beneficial basis.”
“Saying that it wants to reach an agreement with China while constantly imposing maximum pressure is not the correct way to deal with China and will not work.”
With files from Alexandra Li