G20 countries should consider more trade barriers on China to cut imbalances: Bessent

Highlights:

• US Treasury chief says China's massive trade surplus unsustainable
• Countries hit by Chinese exports need to re-examine trade terms, Bessent says
• Bessent says US-China trade situation improving as China's surplus falls
• US, China to press on with limited tariff reduction talks, Bessent says

US Treasury Secretary Scott Bessent said on Sunday he will encourage G20 members to re-examine terms of trade with China to shrink global imbalances and press Beijing to rebalance its economy away from exports and towards domestic consumption.

Bessent said in an interview ahead of a G20 finance leaders meeting that the current flood of exports from China was unsustainable, even though the US direct trade position with China was "rapidly improving."

"The world cannot have a China with a $1.2 trillion trade surplus," Bessent said. "In China, the economy is quite weak, and they are trying to export their way out of it, and they need to rebalance their economy."

Bessent's push to mobilise a coordinated trade response to China comes as legal setbacks force the US to rebuild its tariff policy, which had sharply reduced imports from China but led to an influx of Chinese imports elsewhere, especially to Europe and Latin America.

The US has walled off its economy from many Chinese goods with high tariffs and outright bans on some products including autos. Bessent said he told other industrial economies last year they would face pressures from the China import surge and that "now they are confronted with some very stark choices."

He said it will be up to other countries to give China an incentive to shift away from exports and strengthen its chronically weak domestic demand.

"The rest of the world is going to have to examine their terms of trade with China," Bessent said.

The US is pushing for a G20 joint statement on reducing trade and current account imbalances. China's embassy in Washington could not immediately be reached for comment on its view of the effort.

Tariffs imposed since US President Donald Trump returned to office in 2025 have helped cut the US trade deficit with China for the first six months of 2026 by a third from the same period of 2025, to $73.9 billion, according to US Census Bureau data. Some acceleration of Chinese imports occurred in January of the year-earlier period as importers tried to beat anticipated tariffs.

Although some economists and European leaders have called for a coordinated effort to strengthen China's yuan, Bessent questioned the effectiveness of such a move. The International Monetary Fund has assessed the yuan to be undervalued by as much as 21%.

Suggestions that a new "Plaza Accord" – the 1985 agreement to strengthen currencies against the dollar – was the answer to reducing imbalances are misguided, he said, calling this "an easy way to get around dealing with the real trade problem," which he said was excessive Chinese industrial subsidies and weak domestic demand.

Next US-China summit

Bessent said it was unclear whether he would meet with his Chinese counterpart, Chinese Vice Premier He Lifeng, in person ahead of a White House meeting between President Trump and Chinese President Xi Jinping slated for late September.

Ahead of the summit, US and Chinese officials will press forward with dialogues on potential tariff reductions on non-strategic goods and artificial intelligence guardrails aimed at keeping powerful AI models from falling into the hands of non-state actors, Bessent said.

"I think that there probably are $30 billion of non-strategic, non-critical goods on each side that we could take the tariffs off," Bessent said.

The September summit comes as the US has been rebuilding Trump's tariffs after the US Supreme Court struck down broad duties imposed under an emergency law, including 20% on Chinese imports. Trump's administration in July imposed a 12.5% tariff on Chinese imports under an anti-forced labour trade investigation. It is poised to add more tariffs related to excess industrial capacity under a separate probe.

The US Treasury chief also said that he planned to hold a bilateral meeting during the Asheville G20 conference with People's Bank of China Governor Pan Gongsheng, but declined to discuss details.