US Treasury chief calls on G20 to consider more trade barriers against China to curb imbalances

US Treasury Secretary Scott Bessent has said he will urge G20 members to reassess their trade arrangements with China, arguing that Beijing’s massive trade surplus is unsustainable and that its economy needs to shift away from exports and towards domestic consumption.

Speaking ahead of a G20 finance leaders’ meeting, Bessent said China’s roughly $1.2 trillion trade surplus was creating growing global imbalances, despite an improvement in the US-China trade deficit.

“The world cannot have a China with a $1.2 trillion trade surplus,” Bessent said, arguing that weak domestic demand was prompting Beijing to rely excessively on exports.

“The rest of the world is going to have to examine their terms of trade with China,” he said.

Bessent’s call for a coordinated response comes as the US works to rebuild its tariff regime following legal setbacks that forced the Trump administration to reconsider some of its broad trade measures. While US tariffs have sharply reduced imports from China, they have also contributed to a surge of Chinese goods entering other markets, particularly in Europe and Latin America.

The US has imposed high tariffs and bans on a range of Chinese products, including automobiles. Bessent said he had warned other major industrial economies last year that they would face mounting pressure from the diversion of Chinese exports.

“Now they are confronted with some very stark choices,” he said, adding that other countries would need to create incentives for China to reduce its reliance on exports and strengthen domestic demand.

The US is also pushing for a joint G20 statement aimed at reducing trade and current-account imbalances. China’s embassy in Washington did not immediately comment on the proposal.

US Census Bureau data showed that tariffs imposed after President Donald Trump returned to office in 2025 helped reduce the US trade deficit with China by about a third in the first six months of 2026, to $73.9 billion, from the same period a year earlier.

Bessent also rejected calls for a new “Plaza Accord”-style agreement to address global trade imbalances by strengthening currencies against the US dollar. The original 1985 Plaza Accord sought to drive down the value of the dollar relative to major currencies.

Bessent questioned whether strengthening the Chinese yuan would solve the underlying problem, pointing instead to Chinese industrial subsidies and weak domestic consumption. The International Monetary Fund has estimated that the yuan could be undervalued by as much as 21%.

US-China summit

Bessent said it remained unclear whether he would meet Chinese Vice Premier He Lifeng ahead of a planned late-September meeting between Trump and Chinese President Xi Jinping.

He said US and Chinese officials would continue discussions on potential tariff reductions for non-strategic goods, as well as safeguards for artificial intelligence aimed at preventing powerful AI models from reaching non-state actors.

“There probably are $30 billion of non-strategic, non-critical goods on each side that we could take the tariffs off,” Bessent said.

The planned Trump-Xi summit comes as Washington rebuilds its tariff policy after the US Supreme Court struck down broad duties imposed under an emergency law, including a 20% tariff on Chinese imports.

The Trump administration imposed a 12.5% tariff on Chinese imports in July under an anti-forced-labour trade investigation and is considering additional duties linked to China’s excess industrial capacity under a separate probe.

Bessent also said he planned to hold a bilateral meeting with People’s Bank of China Governor Pan Gongsheng during the G20 conference in Asheville, though he declined to disclose details of the discussions.