US Urges G20 to Impose Trade Barriers on China

US Treasury Secretary Scott Bessent has urged G20 countries to consider imposing more trade barriers on China to address the country's massive trade surplus. In an interview with Reuters on August 30, Bessent stated that the world cannot have a China with a $1.2 trillion trade surplus, citing the need for China to rebalance its economy away from exports and towards domestic consumption.

At a G20 finance leaders meeting in Asheville, North Carolina, 19 of the 20 members agreed to address streams of 'cheap exports' that cause global economic imbalances, with China being the sole dissenter. Bessent plans to encourage leaders from Group of 20 (G20) countries to reexamine their trading relationships with China, citing the need to protect domestic industries and job markets.

China's total exports rose 23.9 percent in July year-on-year, with the country attempting to export its way out of a weak economy. The US has already imposed high tariffs on Chinese goods and outright bans on some products, such as Chinese vehicles, which has led to China diverting exports to other countries, including Europe and Latin America.

## Why it matters The issue of trade imbalances with China has significant implications for the global economy. China's massive export push has pressured economies across the globe, and the US has argued that such distortions are 'sucking' much-needed growth out of the global economy. The G20 meeting came amid a global bond market selloff on worries over growing debt levels and inflation pressures, highlighting the need for countries to take action to address trade imbalances.

The US has warned other trading partners that tougher US tariffs would lead to an influx of Chinese goods diverted to their markets, and Bessent has stated that the rest of the world needs to take a hard look at what they should be doing to protect their citizens' jobs. With chronically weak domestic demand, China has doubled down on exports, leading to a significant trade surplus that is unsustainable in the long term.

## What happens next Chinese President Xi Jinping is slated to visit the US in late September, which may provide an opportunity for the two countries to discuss trade issues and potential solutions. However, with the US and China having imposed tariffs and bans on each other's goods, it remains to be seen whether a resolution can be reached. The G20 meeting has highlighted the need for countries to take action to address trade imbalances, and it is likely that this issue will continue to be a major point of discussion in the coming months.