Context:

Treasury Secretary Scott Bessent urged G20 peers to reexamine trade terms with China to reduce global imbalances, arguing China’s export-led model is unsustainable and domestic demand remains weak. He framed a coordinated response as necessary as U.S. tariffs shift policy and as import surges redirect trade flows to Europe and Latin America. He suggested the rest of the world must incentivize China to rebalance away from exports toward consumption, while cautioning that viewpoints like a Plaza Accord miss the underlying issues of subsidies and weak domestic demand. The dialogue will unfold alongside potential tariff revisions on non-strategic goods and broader efforts to manage AI guardrails, with a possible bilateral meeting with China’s Pan Gongsheng ahead of the September summit. Momentum hinges on concerted actions beyond unilateral tariff moves.

Dive Deeper:

• Bessent said China’s current export flood is unsustainable and urged G20 members to reassess terms of trade to shrink imbalances, aiming to push China toward greater domestic consumption.

• He noted the U.S. trade position with China is improving, but warned that a $1.2 trillion Chinese trade surplus remains problematic for the global economy.

• The U.S. has used tariffs to shield its economy, yet these measures have redirected imports to other regions, prompting calls for a coordinated international response.

• Bessent argued that reliance on a Plaza Accord-style currency fix would not address root causes, such as industrial subsidies and weak domestic demand in China.

• Ahead of the September summit, discussions include potential tariff reductions on non-strategic goods and establishing AI guardrails to prevent misuse by non-state actors, with a proposal that about $30 billion in such goods could be tariff-free on each side.

• A bilateral meeting with China’s Pan Gongsheng was contemplated during the Asheville G20, though details were not disclosed.