Tariff Levels

According to the agreement, the US will maintain tariffs on Chinese goods at 30%; China will keep tariffs on US products at 10%. This arrangement will be valid until August 12th. However, after this date, whether the tariffs will return to previous levels will depend on US President Donald Trump’s approval. Bessent stated that if Trump does not approve, tariffs will revert to their April 2nd levels or another level decided by Trump.

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Content of the Talks

During the talks in Stockholm, not only tariffs but also topics such as China’s investment restrictions on the US, fentanyl supply, and energy trade were discussed. Both sides expressed their willingness to maintain open communication and build a more balanced trade relationship.

Global Economic Impacts

The International Monetary Fund (IMF) stated that the US’s wide-ranging tariffs have negatively impacted global economic growth and fueled inflation. However, a relaxation in some trade measures has raised the global GDP forecast for 2025 to 3%.

Although this agreement between the US and China has prevented the trade war from escalating further, the situation of tariffs after August 12th remains uncertain. Whether the tariffs will continue will be crucial not only for the two countries but also for the future of the global economy.

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“No Single Data Point Panic” Warning on Inflation

Scott Bessent emphasized that no single inflation figure should lead to hasty conclusions, stating that “the trend matters.” He underlined that inflation is not currently accelerating. However, according to Reuters, annual consumer inflation rose to 2.7% as of June (with core inflation at 2.9%). This level is above the Fed’s 2% target, but as Bessent pointed out, the overall trend appears resilient.

Confidence in Powell and Leadership Transition

Scott Bessent highlighted that President Trump has reiterated several times that he will not remove Powell from office: “Trump will not fire Powell.” He also announced that the formal process of searching for Powell’s successor has begun, saying “there are strong candidates both within and outside the Fed.” According to BofA analysis, Bessent himself is currently considered the leading candidate with a 26% likelihood.

Highlighting the Fed’s Forecasting Errors

Scott Bessent also pointed out previous misjudgments made by the Fed: “There were major forecasting errors, and they may occur again in this cycle.” These remarks support the Fed’s current cautious stance. Last week, Bessent stated that the Fed may initiate a rate cut as early as September. The current federal funds rate is in the 4.25–4.50% range. Bloomberg also reported that Powell noted the possibility of easing based on incoming data.

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Cautious Tone in U.S.–China Dialogue

Bessent stated that the U.S.–China relationship is “in a good place” and announced plans to meet his Chinese counterpart within the next two weeks. AP News reports that this meeting is expected to be a continuation of the high-level talks held in Geneva.

No Need to Worry About August 12 Markets

Scott Bessent criticized market fixation on specific calendar dates, saying “there’s no need to worry about what’s coming on August 12; we won’t rush any deals under market pressure.” This approach helps reinforce investor confidence.

In light of these themes, the overall structure indicates that inflation risk, interest rate expectations, Powell’s future, the Fed’s independence, the U.S.–China balance, and even market stability were all addressed by the Treasury Secretary.

• Inflation Risk: June inflation rose to 2.7%, but due to temporary stock-related shocks, the Fed continues to monitor the broader trend. This has led to a “wait and see” approach for September.

• Interest Rate Expectations: Bessent’s remarks have strengthened market anticipation for a rate cut in September. Field data reflects expectations of a 100–125 basis point reduction by late October.

• Powell & Independence: Trump’s reassurance that “he won’t fire Powell” and the initiation of a formal selection process for a successor is viewed as a positive signal for preserving the Fed’s independence. BofA surveys show that Bessent, Warsh, and Waller are considered strong candidates.

• U.S.–China Balance: Strengthening diplomatic engagement may reduce uncertainty in both trade and technology sectors. AP data suggests this meeting will mark a significant step toward renewed cooperation between China and the U.S.

• Market Stability: The August 12 reference sends a “no panic” signal to financial players. This stance could reduce volatility and enhance stability in capital flows.

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On Tuesday, Janet Yellen appeared before the House Financial Services Committee to explain the recent work of the Financial Stability Oversight Council (FSOC), which is composed of the heads of US financial agencies. The council aims to prevent crypto risks and avert financial crises, and has paid special attention to this area in recent years.

In her prepared statement, she said, “The Council has focused on the risks associated with digital assets and transactions on crypto-asset platforms, vulnerabilities that could arise from crypto-asset price volatility, and regulatory gaps.”

Janet Yellen stated that she would continue to work with Congress on crypto legislation. “It is important that existing rules be enforced, and Congress should pass legislation to ensure that stablecoins are regulated and that there is oversight of spot markets for non-securities crypto assets,” she said.

Yellen’s remarks indicate that the crypto sector is at the center of the US government’s financial concerns.

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