U.S. Treasury Secretary Scott Bessent told investors at a closed-door JPMorgan Chase summit Tuesday that the ongoing trade conflict between the United States and China is “unsustainable,” and indicated that both sides would need to find ways to de-escalate, according to reports from Bloomberg and Reuters.
Bessent’s remarks suggested a shift in tone, acknowledging that current tariff levels—effectively resembling a trade embargo between the world’s two largest economies—could not be maintained indefinitely. His comments echo previous characterizations of President Trump’s “escalate to de-escalate” tariff strategy, which Bessent had discussed prior to the 2024 election.
Separately, Bessent addressed ongoing negotiations with Japan, clarifying that the United States has “no currency targets” in mind for discussions over new tariffs. However, he cautioned indirectly against Japanese foreign exchange interventions aimed at weakening the yen.
Bessent also noted that for negotiations tied to the 90-day pause in reciprocal tariffs, the outcome may not be a finalized trade document, but rather an “agreement in principle” that would allow for further detailed talks.
In a keynote address to the Institute of International Finance Tuesday, Bessent called for sweeping reforms to the global financial architecture, pledging to restore equilibrium to the international economic system by re-centering the missions of the International Monetary Fund (IMF) and the World Bank.
“My goal this morning is to outline a blueprint to restore equilibrium to the global financial system and the institutions designed to uphold it,” Bessent said, framing the speech as a call to refocus the Bretton Woods institutions on their core mandates.
Bessent warned that both the IMF and World Bank have experienced “mission creep,” diluting their capacity to address macroeconomic imbalances and promote sustainable growth. “We must enact key reforms to ensure the Bretton Woods institutions are serving their stakeholders—not the other way around,” he said.
The Secretary criticized persistent global trade and financial imbalances, attributing U.S. deficits to “intentional policy choices by other countries” and “an unfair trading system.” Citing China’s export-dependent economic model, he argued it contributes significantly to global distortion, stating, “China’s current economic model is built on exporting its way out of its economic troubles. It’s an unsustainable model… harming the entire world.”
Bessent reiterated that the administration’s “America First” doctrine does not signal retreat from global leadership, but rather a push for accountability. “America First does not mean America alone,” he emphasized.
At the IMF, Bessent called for a return to its core function of addressing balance of payments issues. He criticized the Fund’s recent focus on climate and social agendas, saying, “These issues are not the IMF’s mission.” He urged the IMF to scrutinize “surplus countries” like China and rein in unsustainable lending.
On the World Bank, Bessent pressed for efficiency, energy access, and implementation of graduation policies to focus resources on lower-income nations. He welcomed recent movement to support nuclear energy and emphasized “an all-of-the-above approach” to development financing.
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