Tariff tracker, April 23: Relief rally in the markets as Bessent says tariffs against China not sustainable
The biggest news coming out of Washington on Tuesday was the report of the US Treasury Secretary Scott Bessent telling investors that 'no one thinks the current status quo' of prohibitively high tariffs between China and the US 'is sustainable'. Further, as CNBC reported, Bessent reportedly assured investors that 'there will be a de-escalation' in the trade war between the two largest economies of the world in the 'very near future'.
The news reports lifted investor sentiment as US stock markets shot up — temporarily at least. By the time trading stopped benchmark indices in the US had regained most of the ground they lost on Monday. The government bond yields also fell a bit and most significantly, the weakness in the US dollar also abated.
Even so, in the background more tariff action continued.
Bloomberg reported that the US will impose upto a whopping 3,521% tariffs on solar imports from Asian countries such as Vietnam, Thailand and Malaysia. On the other hand, South China Morning Post (SCMP) reported that 'China has released an action plan to promote the use of the yuan and its own payment system in international trade, as it seeks to reduce its dependence on the dollar amid an escalating trade war with the United States.' The plan aims to leverage Shanghai's role as a global financial hub to promote the use of the Chinese currency, especially in trade involving countries in the Global South, according to the SCMP report.
To be sure, these tariffs and counter-tariffs are imposing a stiff cost for the global economy. The International Monetary Fund's World Economic Outlook, which was released on Tuesday, cut the global growth forecast significantly. 'The swift escalation of trade tensions and extremely high levels of policy uncertainty are expected to have a significant impact on global economic activity. Under the reference forecast that incorporates information as of April 4, global growth is projected to drop to 2.8 percent in 2025 and 3 percent in 2026—down from 3.3 percent for both years in the January 2025 WEO Update, corresponding to a cumulative downgrade of 0.8 percentage point, and much below the historical (2000–19) average of 3.7 percent.'
The IMF states that the 'first priority should be to restore trade policy stability and forge mutually beneficial arrangements'. On that front, however, there was less actual movement and more assurances. Karoline Leavitt, Donald Trump 's Press Secretary, said that 'President's trade team is working at Trump-speed' to ensure deals can be made. In particular, with reference to a trade deal with China, she said that 'the President and his administration is setting the stage for a deal with China'.
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