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Treasury Secretary Scott Bessent recently indicated that there is “an opportunity for a big deal” regarding trade relations between the United States and China, suggesting a potential easing of the ongoing tariff conflict between the two major economies.
Speaking during a keynote address at the Institute of International Finance in Washington, D.C., Bessent emphasized the Trump administration’s desire to shift the U.S. economy towards greater manufacturing, while encouraging China to move away from what he termed “export-led manufacturing growth.”
“China needs to change. The country knows it needs to change. Everyone knows it needs to change. And we want to help it change — because we need rebalancing too,” Bessent remarked.
Bessent described China’s reliance on exports as an “unsustainable” model that is detrimental not only to China but also to the global economy. He reiterated the administration’s stance by stating that “America First does not mean America alone.” This comes in light of a report from the Wall Street Journal indicating that the Trump administration is contemplating reducing tariffs on Chinese goods to alleviate trade tensions between the two nations.
The stock market reacted positively on Wednesday, buoyed by speculation of a potential thawing in trade relations, alongside supportive comments from President Trump regarding Federal Reserve Chair Jerome Powell’s position.
This month, China had increased its retaliatory tariffs on U.S. goods to 125%, matching the tariff level imposed by President Trump on imports from China, with some tariffs potentially reaching as high as 145% on specific products.
During his address, Bessent stressed the urgency for reform in China’s export-driven economic model, emphasizing that it leads to harmful trade imbalances. He highlighted President Trump’s objective to rectify these imbalances through extensive tariff measures.
Calls for Reform at IMF and World Bank
In addition, Bessent addressed the need for the International Monetary Fund (IMF) and the World Bank to be “fit for purpose” again, suggesting that both institutions have deviated from their foundational missions.
He stated that the IMF should not be obligated to provide loans to nations that fail to implement necessary reforms, advocating for a focus on economic stability and growth as indicators of the IMF’s success rather than the volume of funds it dispenses.
Bessent further asserted that the World Bank should abandon the expectation of unconditional financing coupled with superficial commitments to reform, urging for a shift towards more substantive and impactful initiatives.
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