Washington: On Tuesday, US Treasury Secretary Scott Bessent sparked a relief rally in global markets with remarks that eased trade war fears. Speaking at a private investor summit, Bessent declared, “No one thinks the current status quo of prohibitively high tariffs between China and the US is sustainable.” As reported by CNBC, he assured investors that a “de-escalation” in the trade conflict between the world’s two largest economies is expected in the “very near future.” The news boosted investor confidence, driving a surge in US stock markets that erased much of Monday’s losses. Government bond yields dipped slightly, and the US dollar’s weakness stabilized.

Despite the optimism, tariff-related developments continued. Bloomberg reported that the US plans to impose tariffs as high as 3,521% on solar imports from Asian nations like Vietnam, Thailand, and Malaysia. Meanwhile, the South China Morning Post noted that China unveiled an action plan to promote the yuan and its payment system in international trade, aiming to reduce reliance on the US dollar amid escalating tensions. The strategy leverages Shanghai’s role as a global financial hub to boost the Chinese currency’s use, particularly in trade with Global South countries, signaling a strategic counter to US policies.

These tariffs and retaliatory measures are exacting a heavy toll on the global economy. The International Monetary Fund’s World Economic Outlook, released Tuesday, slashed global growth forecasts, projecting 2.8% in 2025 and 3% in 2026—down 0.8% from January’s 3.3% estimate. The IMF emphasized restoring trade policy stability as a priority, but progress remains elusive. Donald Trump’s Press Secretary, Karoline Leavitt, stated, “The President’s trade team is working at Trump-speed to secure deals.” While Bessent’s comments offer hope, the persistent tariff escalations underscore the fragility of global economic stability.

The market’s upbeat response reflects cautious optimism, but the high-stakes trade dynamics continue to challenge policymakers. As both nations navigate this tense landscape, the world watches closely, hoping for meaningful steps toward de-escalation to mitigate the economic fallout.