U.S. Treasury Secretary Scott Bessent's optimism stems from the possibility that China might reduce its reliance on manufacturing exports and shift towards boosting domestic consumption, which could pave the way for a significant trade agreement. He emphasized the need for China to acknowledge the necessity of economic changes to rebalance trade relations.

Tariffs between the U.S. and China have escalated to as high as 145% on Chinese imports and a reciprocal 125% tax on U.S. goods from China, effectively creating a trade embargo and reflecting severe trade tensions between the two countries.

The Trump administration has indicated a possible de-escalation in the trade conflict, with President Trump floating the idea of substantially cutting China tariffs if the two countries can reach a trade deal, signaling a potential reduction in tariffs pending negotiations.

The high tariffs exceeding 125% have significantly impacted trade volumes between the two economic giants, causing considerable shifts in import and export patterns, effectively reducing trade activity and increasing economic uncertainty for both countries.