U.S. Treasury Secretary Scott Bessent told a closed-door investor summit Tuesday that the tariff standoff with China cannot be sustained by both sides and that the world’s two largest economies will have to find ways to de-escalate.

That de-escalation will come in the very near future, Bessent said during an event hosted by JPMorgan Chase & Co. in Washington, which wasn’t open to the public or media. He characterized the current situation as essentially a trade embargo, according to people who attended the session.

Bessent said that it was not the U.S.’s goal to decouple from China and that the current status quo of 145% tariffs on Chinese goods by the U.S. and 125% tariffs on U.S. products by China was not sustainable. He expressed optimism that tensions could cool in the coming months, which would bring relief to markets, but cautioned that a larger deal could take longer.

The Treasury chief told attendees that a comprehensive deal between the two countries could happen in two to three years. He also reiterated his contention that China has stifled its consumer economy and favored manufacturing at the U.S.’s expense, and said that any agreement would require a rebalancing of trade that allowed the U.S. to increase manufacturing.

Negotiations with China over such a deal have not started yet, he said.

A spokesperson for the Treasury Department declined to comment.

U.S. stocks rose after his comments, with the S&P 500 index gaining as much as 2.9%. It closed up about 2.5% in New York, while the dollar rose and Treasuries steadied.

The eagerness to demonstrate progress on trade deals was evident at the White House on Tuesday, even as administration officials stopped short of signaling that there had been genuine movement on agreements. Press secretary Karoline Leavitt said that 18 different nations had brought trade offers to the White House and that U.S. President Donald Trump’s trade team was meeting with 34 countries this week about possible agreements.

She also said that Trump had told her Tuesday the U.S. was "doing very well in respect to a potential trade deal with China,” while sidestepping questions about whether there had been an actual conversation between him and Chinese leader Xi Jinping.

Separately, Politico reported that the White House was close to announcing high-level agreements with Japan and India — though those are expected to largely signal a willingness to negotiate on specific topics, with details to be worked out over months or even years. Leavitt declined to say whether those framework announcements would be enough to stave off the resumption of tariffs at the end of the 90-day pause.

Bessent was speaking on the sidelines of the International Monetary Fund and World Bank’s spring meetings, as finance ministers and central bankers gather from around the world to assess the fallout of Trump’s trade war.

Bessent is scheduled to speak Wednesday morning at an event hosted by the Institute of International Finance. He said in a post on social media platform X that he will share his "thoughts on the state of the global financial system,” during a keynote address and fireside chat hosted by the organization.