As markets reel and global supply chains brace for fresh disruption, the world’s two economic giants are once again toeing the line of decoupling—with rhetoric sharper than ever and the stakes dangerously high.
In a telling interview on Monday, U.S. Treasury Secretary Scott Bessent offered a tempered yet cautionary view on the simmering tensions between Washington and Beijing.
“There doesn’t have to be [a decoupling],” Bessent told Bloomberg TV. “But there could be.”
Behind that ambiguous line lies a diplomatic tightrope. While Bessent admitted there’s “a big deal to be done at some point,” he acknowledged that negotiating with China presents unique complexities:
“China is both our biggest economic competitor and our biggest military rival,” he said—making it clear that any resolution won’t come easy.
A Tug-of-War in Tariffs
The U.S.-China trade clash has escalated swiftly since former President Donald Trump reignited tariff measures, targeting Beijing with aggressive levies. U.S. tariffs on Chinese goods now sit at a staggering 145 percent, while China has responded with its own 125 percent tax wall on U.S. imports.
The economic back-and-forth has left industries across both nations unsettled and foreign investors increasingly jittery.
In a brief moment of relief last week, the White House announced temporary exemptions for consumer tech products like smartphones and semiconductors—items for which China remains a critical supplier. But the reprieve was short-lived.
“NOBODY is getting ‘off the hook’… especially not China which, by far, treats us the worst!” Trump posted on his Truth Social platform Sunday night.
Allies, Anxiety, and Asia’s Response
Even as Washington keeps Beijing guessing, Chinese President Xi Jinping is shoring up his influence in Southeast Asia. On a visit to Vietnam, Xi took a direct swipe at U.S. trade policy without naming names:
“Protectionism will lead nowhere,” Xi said. “A trade war produces no winner.”
Flanked by Vietnamese President To Lam, Xi called for regional cooperation against what he described as “unilateral bullying”, signaling Beijing’s intention to deepen ties with its neighbors while isolating Washington diplomatically.
Behind Closed Doors: Deal or No Deal?
Despite the fiery rhetoric, insiders claim the White House remains open to a trade pact. However, the message from top administration officials is clear: the U.S. expects China to make the first move.
Meanwhile, Bessent sounded the alarm on the broader economic impact of continued tariff warfare:
“These are big numbers,” he said, referencing the imposed tariffs. “No one who thinks they’re sustainable wants them to remain here.”
The fallout is already visible: the dollar is slipping, U.S. Treasury bonds are shedding value, and fears of a global economic downturn are gaining traction among analysts.
