Treasury Secretary Scott Bessent will meet with G20 finance ministers and central bank governors later today in Asheville, North Carolina, to discuss strategies for reviving economic growth, correcting global imbalances, reassessing trade relationships with China, and addressing the sovereign debt mess.
The agenda today will also include plans to deepen Iran's economic isolation, Reuters reported, citing a senior US Treasury official. The discussions signal a continuation of the financial-pressure campaign Bessent unveiled last week (read here).
"The world cannot have a China with a $1.2 trillion trade surplus," Bessent told the outlet on Sunday. "The rest of the world is going to have to examine their terms of trade with China."
Bessent accused Beijing of attempting to "export its way" out of an economic slowdown by flooding overseas markets with cheap Chinese goods that undermine foreign industrial bases. He said G20 members should pressure China to stimulate domestic consumption rather than dump goods in overseas markets.
A Treasury official told Reuters, "And so we're really focusing on this head-on in our G20 discussions to ensure that our economies compete on productivity, innovation, and investment, and not on just sort of policies that push excess production and excess capacity into global markets."
The comments from Bessent and the Treasury official echo similar comments from the administration, which is pressuring Beijing to change its export-heavy economic model because of the damage it inflicts on foreign industrial bases. Europe's auto manufacturing base has found that out the hard way with the flood of BYD EVs.
US Trade Representative Jamieson Greer told Axios earlier this month, "We did that for 25 years with our best people, and everything got worse," referring to efforts to persuade China to shift toward greater consumption.
The Treasury's warning ahead of today's G20 meeting comes as the Trump administration prepares to impose a 7.5% tariff on Chinese goods over excess manufacturing capacity. The measure would restore Trump's second-term tariffs on China to roughly 20%.
Chinese Foreign Ministry spokesman Guo Jiakun told reporters earlier today that any differences with the US should be resolved through dialogue.
"China-US economic and trade ties are mutually beneficial in nature," Guo said at a regular briefing in Beijing. "China never seeks a trade surplus and opposes unilateral tariff measures in all forms."
Last Monday, Bessent announced "Operation Economic Outcast" against Iran, resulting in sanctions against nearly 60 Iran-linked entities, including many based in China. The objective is to break China's reliance on cheap crude imports from the Gulf region.
Politico recently reported that hawkish lawmakers on Capitol Hill have urged the Trump administration to target large Chinese banks to cut off Iran's economic lifeline.
The Trump administration appears to be recalibrating its pressure campaign against the world's second-largest economy carefully ahead of President Trump's summit with Chinese leader Xi Jinping next month. We suspect the Trump team is negotiating with China before the meeting, with any meaningful escalation in tariffs or sanctions more likely to follow after the meeting.