Wall Street breathed a sigh of relief on Wednesday after Treasury Secretary Bessent struck a softer tone on America’s approach toward global trade and reports surfaced that President Trump is considering backing off his threats to levy triple-digit tariffs on Communist China. 

“I wish to be clear: ‘America First’ does not mean America alone,” Mr. Bessent said before the Institute of International Finance in Washington, D.C. “To the contrary, it is a call for deeper collaboration and mutual respect among trade partners.”

The Treasury Secretary also offered an unusually conciliatory message to Beijing, saying that America would strike a deal to help rebalance China’s economy to be more consumption-focused instead of manufacturing-focused. 

“China’s current economic model is built on exporting its way out of its economic troubles. It’s an unsustainable model that is not only harming China but the entire world,” Mr. Bessent said. He added, though, that “we want to help it change — because we need rebalancing too.” 

The speech eased concerns of a trade war escalation and prompted American equities and U.S. government bonds to surge. By market close, the S&P 500 was up nearly 1.7 percent, the Dow Jones Industrial Average rose 1.1 percent, and the Nasdaq climbed 2.5 percent. Asian and European stocks also rose on Wednesday. The market rally eased later in the day after the White House Press Secretary and Mr. Bessent clarified that no unilateral tariff moves were afoot.

Earlier Wednesday, Beijing signaled that it was open to begin trade negotiations with America, though officials insisted that China would not capitulate to threats from the White House. “China’s attitude towards the tariff war launched by the U.S. is quite clear: We don’t want to fight, but we are not afraid of it. If we fight, we will fight to the end; if we talk, the door is wide open,” stated China’s foreign ministry spokesman, Guo Jiakun. 

Wednesday’s rally builds on the market optimism that emerged on Tuesday following reports that Mr. Bessent told investors during a closed-door J.P. Morgan event that the America-China trade war was unsustainable and that he expected the conflict to de-escalate in the near future. He added that the two countries had effectively embargoed each other due to high tariffs. 

Even Mr. Trump expressed willingness to reduce tariffs on China. “145 percent is very high and it won’t be that high,” Mr. Trump told reporters in the Oval Office on Tuesday. “It won’t be anywhere near that high. It’ll come down substantially. But it won’t be zero.”

The same day, the president helped relieve another major concern of Wall Street by clarifying that he was not planning to fire the Chairman of the Federal Reserve, Jerome Powell. The market tanked on Monday after Mr. Trump branded the central banker “a major loser” and urged him to cut interest rates.