() Treasury Secretary Scott Bessent predicted Tuesday there will be a de-escalation between the U.S. and China over tariffs as both countries increased the levies on each other’s products.

“I would posit that over the near, very near future, there will be a de-escalation. … We have an embargo now, on both sides,” Bessent told a closed-door investor conference in Washington, according to a person in the room.  

Bessent is sending a clear message he believes both sides will lower the temperature.

The treasury secretary said the next steps are up to China. The U.S. has said it believes there will be a trade agreement between the two countries but is putting the pressure on Beijing to engage. Bessent said no one thinks the current status quo is sustainable.

White House press secretary Karoline Leavitt tried to put the situation with China in a positive light Tuesday.

“The president and the administration are setting the stage for a deal with China. So we feel everyone involved wants to see a trade deal happen and the ball is moving in the right direction,” she told reporters.

Bessent’s comments gave the stock market a boost, with the Dow Jones rising after his speech.

In his remarks, according to the person in the room, he said container bookings between the two countries are down 64% as of two weeks ago. He said the goal of the administration is not to decouple.

While President Trump last week told ’s Libbey Dean there were communications between American and Chinese officials, Bessent said Tuesday “engagement” on trade had not started yet.

Bessent said there is reason for optimism because there’s “a big deal” that could come about but said it would take work.

He stressed that most people in the West do not believe China has demonstrated free and fair trade, saying it has stifled the consumer economy and favored manufacturing, and is pushing for rebalancing. He also said the U.S. wants to stay engaged, but it is going to be more “fair.”