Bessent isolates China at G20 over $1.2 trillion trade surplus

China's refusal to join a G20 statement on cheap exports isolates Beijing as Washington builds a multilateral case for coordinated trade barriers.

China was the only G20 member to reject a statement condemning "non-market based economies" flooding markets with cheap exports, Treasury Secretary Scott Bessent said Tuesday, as Washington escalates pressure on Beijing's $1.2 trillion trade surplus.

"I'd hoped to be able to announce a unanimous joint communiqué today," Bessent said at a press conference following two days of finance minister and central banker meetings in Asheville, North Carolina. The agreement from the 19 other members "shows the sheer enormity of the problem," he said.

The dissent marks the latest escalation in a trade confrontation that has already reshaped bilateral flows. Tariffs imposed since President Donald Trump returned to office in 2025 cut the US trade deficit with China by about one-third in the first half of 2026 to $73.9 billion, according to US Census Bureau data. The Supreme Court struck down broad duties imposed under an emergency law, including a 20 percent tariff on Chinese imports, prompting the administration to impose a 12.5 percent tariff in July under an anti-forced-labour investigation. The IMF has assessed the yuan as undervalued by as much as 21 percent.

Bessent said countries would act in the coming "days, weeks or months" to "reach a resolution on this unsustainable equilibrium," and urged G20 members to re-examine their terms of trade with China. The push reframes what has been a bilateral US-China dispute as a global-imbalances problem, potentially giving Europe, Latin America and other economies cover to raise their own barriers against redirected Chinese exports.

From Bilateral Tariffs to Coordinated Action

Bessent's framing targets the structural driver of the imbalance rather than the symptom. He dismissed a revived Plaza Accord-style currency deal — the 1985 agreement to strengthen major currencies against the dollar — as "misguided," arguing the core problem is excessive Chinese industrial subsidies and weak domestic demand. "The world cannot have a China with a $1.2 trillion trade surplus," he said, adding that China's economy is "quite weak" and Beijing is trying to "export their way out of it."

The savings-investment identity in national accounts explains why tariffs alone cannot close the gap: a persistent current-account surplus reflects domestic savings running well above domestic investment. Tariffs abroad shift where the surplus lands but do not eliminate it. Chinese exports redirected from the US market have already surged into Europe and Latin America, Bessent said, warning that other economies now face "difficult choices" about their own trade defenses. For India, whose imports from China have been rising, the G20 push tests whether New Delhi joins a coordinated tariff response or holds a middle position.

Trump-Xi Summit Looms as Tariff Talks Continue

The G20 confrontation sets the stage for a planned late-September meeting between Trump and Chinese President Xi Jinping. Bessent said roughly $30 billion of non-strategic goods on each side could see tariffs removed as part of that dialogue, alongside safeguards aimed at preventing powerful AI models from falling into non-state hands.

The Treasury chief also said he planned a bilateral meeting with People's Bank of China Governor Pan Gongsheng during the Asheville conference, though he declined to provide details. On Iran, Bessent said it is "incumbent upon China to work toward a solution" as Washington's "Operation Economic Outcast" threatens secondary sanctions on institutions with links to Tehran. China is Iran's top trading partner and top oil buyer, and Beijing gets 50 percent of its energy from the Gulf.

The last time Washington pursued coordinated currency realignment was the 1985 Plaza Accord, which depreciated the dollar against the yen and Deutsche Mark. Bessent's explicit rejection of that playbook suggests the administration will lean on tariffs and subsidy discipline rather than exchange-rate intervention — a stance that could keep the yuan under pressure if trade measures escalate. If the G20 statement translates into coordinated barriers, Chinese exporters face tariff walls in additional markets beyond the US, while consumers in barrier-raising economies absorb higher prices on affected categories.

This article is for informational purposes only and does not constitute investment advice.