Trump Shakes Up Global Trade: Insights on US-China Economic Shift
China presents a chance for a substantial agreement, according to Treasury Secretary Bessent.
In a candid conversation on 'Varney & Co.', EJ Antoni, a senior fellow at Unleash Prosperity, discussed President Donald Trump's trade standoff with China.
Treasury Secretary Scott Bessent shared some optimistic news on Wednesday, hinting at a potential "big deal" with China to reduce tariffs significantly, provided that China takes steps to rebalance its economy.
Bessent participated in a keynote address and Q&A session at the Institute of International Finance (IIF), where he emphasized the U.S.'s aspiration to rebalance its own manufacturing sector while encouraging China to pivot towards more domestic consumption.
"There's an opportunity for a big deal here," said Bessent. "If China converges on less dependence on export-led manufacturing growth and a rebalancing towards a domestic economy - I think they use the term 'dual circulation' - this could mark a turning point."
Implications of Trump's Approach:President Trump hinted at potentially slashing the 145% tariffs currently imposed on most imported goods from China, signaling a possible de-escalation of trade tensions in light of upcoming negotiations with Chinese leaders. The president stated, "145% is very high, and it won't be that high... No, it won't be anywhere near that high. It'll come down substantially, but it won't be zero."
While the exact terms of the proposed deal remain unclear, the focus seems to be on addressing China's economic policies and their impact on global trade. The U.S. has long stressed the need for more reciprocal trading practices, improved market access, and a reduction in non-tariff barriers that disadvantage American businesses in foreign markets.
The Need for Rebalancing:Secretary Bessent highlighted that the recent economic data shows China's economy becoming increasingly reliant on manufacturing exports, which risks creating even greater imbalances with trading partners if the current trend continues. He went on to express concerns about China's economic model, explaining that the excessive reliance on manufacturing exports hampers domestic consumer demand and maintains aggressive tariffs, ultimately harming both China and the global economy.
Bessent called for international financial institutions, such as the IMF and the World Bank, to encourage China's rebalancing efforts and apply pressure on China to address its distorted economic practices. He emphasized the importance of the IMF explicitly identifying countries like China that have adopted global distortions and invoked transparency in currency practices.
In addition, Bessent underscored the inadequacy of treating China, the second-largest global economy, as a developing nation and called for the World Bank to establish graduated timelines for countries that have achieved escalating economic success.
The IMF recently reduced its forecast for U.S. economic growth due to ongoing trade tensions and policy uncertainty. Nonetheless, Secretary Bessent believes a successful rebalancing of China's economy could help stabilize the global economy. Bessent highlighted the potential for China to stop export overcapacity and focus on supporting its consumers and domestic demand, thereby contributing to a more balanced global trade environment.
[1] "United States’ Perspective on China’s Economic Policies," Council on Foreign Relations, August 13, 2020, [https://www.cfr.org/backgrounder/us-perspective-china-s-economic-policies][2] "U.S. Trade Policies Under President Trump: Key Proposals and Implications," Congressional Research Service, September 16, 2020, [https://crsreports.congress.gov/product/pdf/R/R46254][3] "Addressing Chinese Economic Practices: Critical Issues for U.S. Policy," The Heritage Foundation, January 28, 2020, [https://www.heritage.org/asia/report/addressing-chinese-economic-practices-critical-issues-us-policy][4] "Trade: Tariffs and Trade Barriers," The White House, n.d., [https://www.whitehouse.gov/issues/trade/tariffs-trade-barriers/]
- The recent optimism in financial circles suggests a possible reduction in tariffs between the US and China, as discussed by Treasury Secretary Scott Bessent.
- In a move that could redefine the global economy, President Trump hinted at potential adjustments to the 145% tariffs on imported goods from China, signaling a shift in the ongoing trade tensions.
- The proposed trade deal between the US and China seems to focus primarily on addressing China's economic policies and their impact on global trading markets.
- Secretary Bessent emphasized the importance of rebalancing China's economy, expressing concerns about its excessive reliance on manufacturing exports and the resulting imbalances with trading partners.
- International financial institutions, such as the IMF and the World Bank, are being called upon to encourage China's rebalancing efforts and pressure China to address its distorted economic practices.
- The potential success of China's economic rebalancing could help stabilize the global economy and contribute to a more balanced general-news for businesses and finance.
- As the outlook for the US economy in 2025 remains uncertain due to ongoing policy disputes and global trade tensions, the rebalancing of China's economy could play a significant role in its recovery and the overall improvement of the global economy.
