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Wall Street stocks rallied and oil prices jumped on Tuesday after the US Treasury secretary said a trade war with China was “unsustainable”.
Scott Bessent told investors at a conference hosted by JPMorgan that he expected the two countries would reach a deal at some point, according to people familiar with his comments.
Bessent added the high tariffs the US and China have imposed on imports from each other amounted to what were in effect trade embargoes.
Donald Trump has slapped a 145 per cent tariff on goods from China, while Beijing has responded with retaliatory tariffs that total 125 per cent.
Markets, which had opened higher following a sell-off in the previous session, climbed further on Bessent’s comments. They were first reported by Bloomberg.
The blue-chip S&P 500 was up 2.6 per cent by early afternoon in New York while the tech-heavy Nasdaq Composite was up 3.1 per cent. Both indices fell sharply on Monday on fears that the US president might fire Federal Reserve chair Jay Powell.
In commodity markets, Brent crude, the international oil benchmark, rose 2.6 per cent to $67.98 a barrel on hopes that the worst aspects of a global trade war might be avoided. Gold, a classic safe haven asset that hit a record $3,500 a troy ounce earlier on Tuesday, retreated 1 per cent to $3,388.
However, while Bessent expressed optimism that a deal would be reached, he cautioned that there were no diplomatic negotiations between the countries to end the trade war.
One person familiar with his remarks said there were no signs that the two countries were close to finding a solution and that markets were reading too much into his remarks.
He added that it was unclear whether Trump agreed with his Treasury secretary.
“This is all messaging to hold the markets together while these negotiations are ongoing,” said Steven Blitz, chief US economist at TS Lombard. “Bessent is stating an obvious fact. But it looks like the US is blinking first, which Trump would obviously rail against.”
The White House and Treasury did not immediately reply to requests for comment.
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