US, China tariffs need to fall for trade talks to start, Bessent says

Treasury Secretary Scott Bessent said on Wednesday that he believes that excessively high tariffs between the U.S. and China will have to come down before trade negotiations can proceed.

Bessent told reporters on the sidelines of International Monetary Fund and World Bank annual meetings that de-escalation was necessary for the world's two largest economies to rebalance their trading relationship.

Asked whether that meant a reduction in the 145% U.S. tariffs on Chinese goods and China's 125% tariffs on U.S. goods, Bessent said: "I think that has to be, because again, 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 declined to verify a Wall Street Journal story that the Trump administration was considering a unilateral reduction in its tariffs on Chinese imports, in some cases by more than half, in a bid to de-escalate a bitter trade war.

"I'd be surprised if that discussion's happening," Bessent said, adding that there would be no unilateral offer from Trump to reduce tariffs. "I would not be surprised if they went down in a mutual way."

Bessent said that the Trump administration was working to restore tariff certainty through negotiations with dozens of countries, and he did not think that it would involve an "extended process," because countries will want to avoid the higher reciprocal tariffs that were announced on April 2.

Bessent also clarified previous remarks about a two- to three-year timeline for a U.S.-China deal, saying that this referred to the full rebalancing process, not the negotiations for a deal, which should happen much faster.

He said the third quarter of this year is a "reasonable estimate" for achieving clarity on the ultimate level of Trump's tariffs, and said he was not concerned about the IMF's steep U.S. growth downgrade by nearly a full percentage point to 1.8% for 2025, a cut due largely to Trump's tariffs, retaliation and the uncertainty that they are causing.

Bessent has set a goal for pushing U.S. growth and argued that Trump's economic policies would push growth up to 3% through more energy production,

"I'm not concerned about the IMF projections. And again, I think the third quarter would probably be a reasonable estimate that we will have clarity on tariffs," Bessent said. "We will have the tax bill done, and I would think that the deregulation, as I mentioned, was always going to be the slowest component, but that should start kicking in the third and fourth quarters."