Tariff status quo with China ‘working pretty well’: US Treasury Secretary Bessent

WASHINGTON – Treasury Secretary Scott Bessent indicated that the US is satisfied with the current tariff arrangement with China, a signal the Trump administration is looking to keep ties calm 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, Mr Bessent said that “we’re very happy” with the tariff 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 broken, don’t fix it,” he said in the interview on Aug 19. “We have had very good talks with China. I imagine we’ll be seeing them again before November.”

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

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

Last week, Mr Trump extended a pause on higher tariffs on Chinese goods for another 90 days into early November, a move that stabilised 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 Mr Trump’s tariffs would help soften the blow to the US’ 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.

Mr Caleb Ragland, president of the American Soybean Association, said in a letter to Mr Trump dated Aug 19 that American soya bean farmers are near a “trade and financial precipice” and cannot survive a prolonged trade war.

And in a move that is likely to irk China, 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 labour in the country’s Xinjiang region.

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

Earlier in August, Mr 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 Russian President Vladimir Putin’s war against Ukraine.

There has 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”.

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