On Monday, US Treasury Secretary Scott Bessent stated that the US government is in contact with China on all fronts, but due to the trade imbalance between the two countries, Beijing must take the first steps to ease the tariff war with the United States. He also warned the Chinese Communist Party that the US has cards to escalate the trade war.
During an interview on CNBC’s program “Squawk Box” on Monday, Bessent said, “We will wait and see. As I have emphasized repeatedly, I believe that easing trade frictions depends on China because the goods they sell to us are five times the goods we sell to them, so these tariffs of 120% to 145% are not sustainable.”
The Treasury Secretary mentioned that Beijing exempting some tariffs on goods indicates their intention to ease tensions. He added that he has an “escalation ladder” to climb but stated, “We really do not want to use it.”
He explicitly mentioned that escalation could include trade embargoes.
Bessent pointed out that the US is currently putting negotiations with Beijing on hold as the Trump administration seeks to reach trade agreements with 15 to 17 other countries. He mentioned that it would not surprise him if a trade deal with India is announced first.
“Many countries have presented us with very good proposals, and we are evaluating them,” he said.
Bessent added, “We are negotiating tailor-made agreements, and the President will be closely involved in every agreement. He has laid the groundwork and personally told them how important this relationship is and how important fair agreements are for the American people.”
The Treasury Secretary stated on Sunday that US officials met with Chinese officials during the International Monetary Fund-World Bank meetings in Washington last week to discuss “financial stability,” but he did not disclose if trade issues were discussed during the talks.
When asked about Beijing’s firm denial of any negotiation issues, Bessent remarked, “I think they are catering to different audiences.”
Apart from assessing relationships with Beijing and other Asian countries, Bessent also mentioned on Monday that European countries have been experiencing panic since the outbreak of trade tensions, leading to a strong Euro against the US Dollar. The Euro has risen by almost 10% since reaching near parity with the Dollar in early January this year.
“You will see the European Central Bank starting to lower interest rates to try to bring down the Euro,” Bessent said. “Europeans do not want a strong Euro. We follow a strong Dollar policy.”