Market Data 
On Wednesday, United States (US) Treasury Secretary Scott Bessent crossed the wires to discuss the trade war between China and his country. He commented that President Donald Trump has not offered to unilaterally lower tariffs on China. Bessent added, “As I’ve said many times, I don’t think either side believes that the current tariff levels are sustainable, so I would not be surprised if they went down in a mutual way.”
Bessent added that he doesn’t have a time frame for starting a discussion with China, though “it will have to take place at lower levels than Trump and Xi.”
Markets reaction to Bessent’s comments
US equities dipped on these comments, with market mood turning mildly sour. The S&P 500 fell from daily highs to below 5,400 near its opening price. Meanwhile, the US Dollar Index (DXY), which tracks the performance of the Greenback against a basket of six currencies, paired some of its earlier losses, standing near 99.61 virtually unchanged.
US-China Trade War FAQs
Generally speaking, a trade war is an economic conflict between two or more countries due to extreme protectionism on one end. It implies the creation of trade barriers, such as tariffs, which result in counter-barriers, escalating import costs, and hence the cost of living.
An economic conflict between the United States (US) and China began early in 2018, when President Donald Trump set trade barriers on China, claiming unfair commercial practices and intellectual property theft from the Asian giant. China took retaliatory action, imposing tariffs on multiple US goods, such as automobiles and soybeans. Tensions escalated until the two countries signed the US-China Phase One trade deal in January 2020. The agreement required structural reforms and other changes to China’s economic and trade regime and pretended to restore stability and trust between the two nations. However, the Coronavirus pandemic took the focus out of the conflict. Yet, it is worth mentioning that President Joe Biden, who took office after Trump, kept tariffs in place and even added some additional levies.
The return of Donald Trump to the White House as the 47th US President has sparked a fresh wave of tensions between the two countries. During the 2024 election campaign, Trump pledged to impose 60% tariffs on China once he returned to office, which he did on January 20, 2025. With Trump back, the US-China trade war is meant to resume where it was left, with tit-for-tat policies affecting the global economic landscape amid disruptions in global supply chains, resulting in a reduction in spending, particularly investment, and directly feeding into the Consumer Price Index inflation.
