Bessent says he doesn't know if Trump has spoken with China’s Xi

Treasury secretary says ‘good behavior’ by partners will keep tariffs lower.

Treasury Secretary Scott Bessent defended President Donald Trump's negotiating strategy on trade deals but said he didn't know whether Trump was speaking directly with Chinese President Xi Jinping.

"I don't know if President Trump has spoken with President Xi. I know they have a very good relationship and a lot of respect for each other, but again, I think that the Chinese will see that this high tariff level is unsustainable for their business model," Bessent told ABC News' "This Week" co-anchor Martha Raddatz.

Bessent also offered a time frame of "months" to hammer out a trade deal with China, but suggested "good behavior" from other countries engaged in negotiations could keep the tariffs from remaining high.

"A trade deal can take months, but an agreement in principle and, the good behavior and staying within the parameter of the deal by our trading partners can keep the tariffs from ratcheting back to the maximum level."

Here are more highlights from Bessent's interview:

Raddatz: And President Trump's strategy really has been to announce these tariffs, and dial some back, pause them, make exceptions. Explain why you see this as a good negotiating strategy.

Bessent: Well, in game theory it's called "strategic uncertainty." So you're not going to tell the person on the other side of the negotiation where you're going to end up. And nobody's better at creating this leverage than President Trump. You know, he's shown these -- the high tariffs, and here's the stick. This is where the tariffs can go. And the carrot is "Come to us, take off your tariffs, take off your non-tariff trade barriers, stop manipulating your currency, stop subsidizing labor and capital and then we can talk."

Raddatz: According to Bloomberg, you said a comprehensive deal between the U.S. and China could happen in two to three years. Trump said a deal will come quickly. You've heard him say that. You said, obviously, it was going to be a slog. So how long do you think?

Bessent: Well, look, I think that there is a path here. So the first path will be, again, a deescalation, which I think the Chinese are going to have to have. Then I think there can be an agreement in principle, these 17 or 18 important trade deals that we're negotiating, the actual papering of the trade deal. A trade deal can take months, but an agreement in principle and the good behavior and staying within the parameter of the deal by our trading partners can keep the tariffs there from ratcheting back to the maximum level, sure.

Raddatz: And it's very rare, I think it happened a couple times in the '70s, for the dollars, stocks and bonds to get hit as hard as they simultaneously did over the last few weeks. If the goal is to get countries to stand with us against China, does it worry you at all that investors seem to be losing confidence in the U.S.?

Bessent: Well, again, you're saying losing confidence. And the -- I don't think that this is necessarily losing confidence. And anything -- I've been in the markets for 35, 40 years. Anything that happens over a two-week, one-month window can be either statistical noise or market noise. And they -- you know, we're in this for the long term. And the important thing is that we are setting the fundamentals for a strong dollar, a strong economy, a strong stock market, and for investors to know that they -- that the U.S. government bond market is the safest and soundest in the world.