US-China tariff status quo working well ahead of November, says Bessent

Treasury Secretary Scott Bessent indicated the US is satisfied with the current tariff set up with China, a signal the Trump administration is looking to maintain calm with its economic rival before a trade truce expires in November. 

When asked in a Fox News interview when progress in negotiations would be seen and if the US needed a trade agreement because of how tariffs were going, Bessent said that “we’re very happy” with the situation with China. “I think right now the status quo is working pretty well,” he said.  

“China is the biggest revenue line in the tariff income — so if it’s not broke, don’t fix it,” he said in the interview on Tuesday. “We have had very good talks with China. I imagine we’ll be seeing them again before November.” 

Bessent’s remarks indicate that an easing of tensions between the two sides remains in place, potentially creating an opening for President Donald Trump to meet Chinese leader Xi Jinping. 

The Trump administration has generally dialed down its confrontational tone with Beijing recently to get a summit with Xi and a trade deal. Secretary of State Marco Rubio has said a meeting between the two leaders is likely, though no date has been set.

Last week, Trump extended a pause on higher tariffs on Chinese goods for another 90 days into early November, a move that stabilized trade ties between the world’s two largest economies. 

That was possible because the US and China agreed to reduce tit-for-tat tariff hikes and ease export restrictions on rare earth magnets and certain technologies. S&P Global Ratings has said revenues from Trump’s tariffs would help soften the blow to the US’s fiscal health from the president’s tax cuts, enabling it to maintain its current credit grade. 

Still, the trade dispute with China is causing some pain for the US Caleb Ragland, president of the American Soybean Association, said in a letter to Trump dated Tuesday that American soybean farmers are near a “trade and financial precipice” and cannot survive a prolonged dispute.  

Trump said last week that he hoped China would massively step up its purchases of American soybeans. China hasn’t bought a single cargo of soybeans from the next harvest, which starts in September. 

And in a move that’s likely to irk Beijing, the Trump administration is set to step up scrutiny of imports of steel, copper, lithium and other materials from the world’s No. 2 economy to enforce a US ban on goods allegedly made with forced labor in the country’s Xinjiang region.  

The plan dovetails with Trump’s broader trade goals, given he wants to lower the US trade deficit with China and put pressure on Beijing to curb shipments of fentanyl and precursor chemicals.  

Earlier this month Trump doubled tariffs on Indian goods to 50 per cent, saying the hike was punishment for India’s purchases of discounted oil from Russia, which he argues helps fund President Vladimir Putin’s war against Ukraine. 

There’s been concern that the US may also target other nations — China is the largest overall buyer of Moscow’s crude — but so far India has been the only major economy to be hit with such “secondary tariffs.” 

Bessent defended the administration’s lack of secondary tariffs on China in an interview with CNBC, saying India only ramped up its purchases after the Kremlin’s full-scale invasion of Ukraine in 2022.