Bessent says the tariff standoff with China is unsustainable and that he expects the situation to de-escalate.
Situation to De-Escalate
Stocks reversed yesterday’s losses with some Wishful Thinking from Bessent.
US Treasury Secretary Scott Bessent told a closed-door investor summit Tuesday that the tariff standoff with China is unsustainable and that he expects the situation to de-escalate.
Bessent added that negotiations haven’t started but that a deal is possible, according to people who attended his session at an event hosted by JPMorgan Chase & Co. in Washington, which wasn’t open to the public or media.
The Treasury Department didn’t immediately respond to a request for comment.
The Path to De-Escalation
The path to de-escalation is both clear and easy in theory, but extremely difficult in practice.
The only person who can de-escalate the tariff standoff is Trump.
He can pick up the phone at any time, admit mistakes, back down, drop his insane tariffs on the world, and start all over.
Conceptually this is clear and very easy. What about practice?
Bessent is hoping to buy time. I don’t particularly care for him, but perhaps he is doing the best he can with Trump changing his mind weekly, or even hourly.
Related Posts
March 10: Trump and Secretary of Treasury Bessent Discuss the “Detox Recession”
Don’t worry, it’s just a little more pain and inflation disturbance before tariff greatness begins.
The above attitude lasted until Reciprocal Tariff madness started on April 2.
March 16, 2025: Trump Wants a Weak Dollar But Needs a Strong One
Trump wants the Fed to cut interest rates to weaken the dollar and boost exports. But that’s not what helped him get elected.
On April 2, I noted Trump’s Big Announcement Is Half-Reciprocal Tariffs on the World
Factoring in value added taxes and other alleged manipulations, Trump announces Half-Reciprocal Tariffs with a minimum baseline of 10 percent.
The stock market immediately puked, and counterintuitively so did bonds and the dollar.
That’s a sign of foreign investors pulling the plug on US assets. Treasuries became a questionable asset and gold soared to new record highs daily.
On April 9, 2025 I noted Trump Capitulates with a 90-Day Pause on Tariffs, DOW Jumps 2,200 Points
Trump has had enough of the stock market decline.
However, Trump did not fully back down on Mexico or Canada, treating our two best trading partners worse than the rest of the world.
What we did not know at the time was Bessent’s role in this pause.
We found out on April 20.
I then reported How the Tariff Pause Happened – Navarro Was Purposely Out of the Room
Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick timed a meeting with Trump.
Get Rid of Navarro
Navarro needs to be out of the White House permanently. But that is impossible because of Trump’s misguided faith in his trade advisor.
And Lutnick continually runs hoops to support Trump’s contradictory mission, assuming there is a mission. But at least Lutnick was on the right side of this effort.
Bessent is running a tightrope but he managed to pull this stunt off.
Trump’s Trade Wars Will Fail, Currency Wars Will Be Next
Here’s a relevant post that haven’t mentioned recently.
On December 23, 2024, I commented Trump’s Trade Wars Will Fail, Currency Wars Will Be Next
Trump will fail to increase exports with trade wars and tariffs. Currency wars will result.
On December 23, 2024, the US Dollar Index closed at 108.02. It’s now 98.58, down 8.7 percent.
Welcome to a trade war and a currency war. The world correctly understands the US is not the best place to invest.
To repeat: On April 2, along with reciprocal tariffs, the stock market immediately puked, and counterintuitively so did bonds and the dollar.
That’s a sign of foreign investors pulling the plug on US assets.
This is what we call winning.