During a CNBC interview this past Monday, United States Secretary of the Treasury Scott Bessent stated that all branches of the government are communicating with China, according to reports from Reuters.
Main Points
“China must take the initiative to reduce tariff tensions.”
“Numerous among our 17 significant trade partners have presented favorable proposals to prevent US tariffs.”
“European nations are concerned regarding the Euro’s strength.”
“The relationship with China is complex.”
“Negotiations with Asian trade partners are progressing positively.”
“We’ve engaged in substantial trade discussions with our Japanese allies.”
“Chinese exemptions indicate a desire to ease trade tensions.”
“India could potentially be among the first trade agreements we finalize.”
Market Impact
These remarks did not elicit a significant market response. At the time of this report, the US Dollar Index remained nearly unchanged for the day, holding at 99.60.
US-China Trade War FAQs
In general terms, a trade war signifies an economic dispute between nations, often stemming from pronounced protectionist policies. This involves the implementation of trade restrictions, such as tariffs, which in turn lead to retaliatory measures, increasing import expenses and, consequently, the cost of living.
The economic friction between the United States and China commenced in early 2018, when then-President Donald Trump imposed trade barriers on China, citing unfair trade practices and the theft of intellectual property by the Asian nation. China responded with retaliatory tariffs on various US products, including vehicles and soybeans. These tensions grew until the US and China finalized the Phase One trade agreement in January 2020. This agreement mandated structural overhauls and adjustments to China’s economic and trade framework, aiming to restore stability and confidence between the two countries. However, the Coronavirus pandemic shifted the focus away from the dispute. It is important to note that President Joe Biden, succeeding Trump, maintained the existing tariffs and introduced additional ones.
The return of Donald Trump to the White House as the 47th US President has reignited tensions between the two nations. During his 2024 campaign, Trump pledged to enact 60% tariffs on China upon his return to office, which occurred on January 20, 2025. With Trump’s return, the US-China trade war is set to resume where it left off, with reciprocal policies impacting the global economic environment through disruptions in global supply chains, leading to decreased spending, particularly in investment, and directly contributing to Consumer Price Index inflation.
