'LOSER': Scott Bessent just blasted this retaliatory tariff play by China

Summary

In a recent Fox Business segment, U.S. Treasury Secretary Scott Bessent discussed the escalating trade tensions between the U.S. and China. In response to President Trump's tariffs, China imposed an 84% tariff on U.S. goods, further straining the economic relationship. Bessent argues that this move will ultimately harm China more than the U.S. due to their economic imbalance. He also touched upon issues like China’s fentanyl exports to the U.S., the necessity of realigning global supply chains, and U.S. economic measures in place including tariffs, tax negotiations, and deregulation efforts.

Highlights

• 'Loser move': China's 84% tariff on U.S. goods may backfire due to trade imbalances. 🇨🇳
• China and U.S. are in a 'soft war' with ongoing tariff retaliations. 🥊
• The economic interconnectedness between the two nations is crucial yet risky. 🤝
• Bessent calls for acknowledgment of China’s role in the fentanyl crisis impacting U.S. health. 💊
• Tax reforms and deregulation are key focuses to stimulate the U.S. economy. 💼
• Discussions of U.S. trade alliances with other countries amid tensions with China. 🌏
• Potential impact on the Chinese economy with new U.S. tariffs and calls for world trade balance. ⚖️
• U.S. strategies to finalize a significant tax bill amidst political negotiations. 📜

Key Takeaways

• China imposed an 84% tariff on U.S. goods in retaliation to U.S. tariffs. 😮
• Scott Bessent believes these tariff battles will hurt China more due to their economic imbalance. 🤔
• There are discussions around moving supply chains from China to the U.S. to reduce reliance. 🏭
• The U.S. is also pressuring China on issues such as fentanyl export controls. 🚫
• Bessent highlighted ongoing U.S. efforts in tax extensions, trade negotiations, and financial deregulation. 🏦

Overview

Fox Business provided a captivating segment featuring an interview with U.S. Treasury Secretary Scott Bessent. He discussed China's latest move to raise tariffs on U.S. goods to 84%, a retaliatory act following President Trump's significant tariffs on China. Bessent expressed that this escalation could spell more trouble for China given its economic dependency on U.S. consumerism, even hinting at the potential for it to be a 'loser move' on China's part.

Moreover, Secretary Bessent shifted gears to highlight the U.S.'s strategic approach in this 'soft war', where the aim is to recalibrate the global supply chain to reduce dependency on China. Bessent emphasized the dire need for China to tackle the export of fentanyl precursor chemicals, a separate but pressing issue impacting American society. He argued that the U.S. is actively working on numerous fronts, including tax extensions and trade realignment, setting the stage for economic stabilization.

The conversation also touched on possible ramifications in the global markets, as the U.S. encourages its allies, like Japan and South Korea, to engage in productive negotiations. This comes as Europe ponders its economic engagements. Bessent's insights portray a U.S. determined to balance and fortify its economic policies through both internal reforms, such as deregulation, and external tactics, like trade negotiations and tariff adjustments, resonating national resilience amid these global challenges.

Chapters

• 00:00 - 00:30: Introduction to Tariff Escalation This chapter covers the recent developments in the escalating trade tensions between the US and China. It discusses China's decision to impose an 84% tariff on US goods as a retaliatory measure following President Trump's recent tariffs, which include a 104% tariff on Chinese goods. The conversation features insights from US Treasury Secretary Scott Bessant on the implications of these developments.
• 00:30 - 03:00: Impact on US-China Relations The chapter discusses the impact of President Trump's retaliatory tariffs on US-China relations. The speaker expresses disappointment that China is unwilling to negotiate, labeling them as the worst offenders in the international trading system due to their imbalanced economy. The escalation of trade tensions is viewed as detrimental to China, despite the presence of intelligent economists within the country.
• 03:00 - 06:00: Fentanyl Issue and Economic Strategies This chapter discusses the economic dynamics between China and the United States, highlighting China's position as a surplus country with significant exports to the US. It elaborates on the potential implications of tariffs and economic policies, noting that China's exports to the US vastly surpass US exports to China. The chapter hints at internal debates among China's leadership and technocrats about their economic edge and the strategic responses required.
• 06:00 - 10:00: US Economic and Trade Policies The chapter discusses the intricate relationship between the US and China's economies, particularly focusing on trade connections. It highlights the dependency of the US on cheap goods produced in China and raises questions about shifting supply chains to America to reduce reliance on China, acknowledging that such a transition won't be immediate.
• 10:00 - 13:00: Global Economic Implications and Reactions In this chapter, the discussion focuses on the economic and political tensions between the US and China. It's suggested that although conflicts do not have winners, the impact will be more severe for China than for the US if tensions escalate further. A strategic move or response to China's aggression is also contemplated.
• 13:00 - 18:00: Tax Policies and Congressional Negotiations The chapter discusses the source and distribution of fentanyl precursor chemicals originating from China and their journey into North America, eventually flooding the US market. The dire consequence of this drug distribution is emphasized with the alarming statistic of over 100,000 American deaths annually. A potential diplomatic action suggested is for China to take steps in controlling these precursor chemicals to curb the fentanyl crisis.
• 18:00 - 22:00: Challenges and Strategic Responses The chapter "Challenges and Strategic Responses" discusses the inconsistencies and challenges in international trade regulations, particularly focusing on the export of chemicals to the US that could potentially be harmful. It explores the strategic responses such as tariffs imposed by President Trump on China, initially aimed at curbing the flow of fentanyl. However, the chapter raises questions about whether these tariffs have shifted their focus towards raising revenue or improving supply chains in America, indicating a broader strategic agenda beyond the original intent.
• 22:00 - 28:00: Market Reactions and Economic Forecasts This chapter discusses the market reactions to President Trump's policies, particularly focusing on tariffs and their impact on business sentiment and economic forecasts. Business leaders express concerns about these tariffs, despite the initial excitement about Trump's agenda, which included deregulation, energy tapping, and tax cuts. The chapter also touches on Trump's mandate and actions on border control.
• 28:00 - 30:00: Conclusion and Future Outlook The chapter discusses ongoing actions related to deportation, specifically focusing on criminals and individuals who have overstayed their visas. It mentions that this is a significant and ongoing effort. Additionally, it highlights President Trump's focus on trade, emphasizing that these actions are interconnected with other political activities, as noted in a reference to an interview with Senator Hagerty.

'LOSER': Scott Bessent just blasted this retaliatory tariff play by China Transcription

• 00:00 - 00:30 Welcome back. Breaking this morning, China says it will impose an 84% tariff on US goods. Another retaliation move in response to President Trump's reciprocal tariffs. Those tariffs took effect last night at midnight, including the 104% tariff on China. Joining me now is US Treasury Secretary Scott Bessant. Mr. Secretary, thanks so much for joining me this morning. Morning, Maria. Well, I want to start right there. give us your reaction to uh more escalation coming out of China taking their tariffs up to
• 00:30 - 01:00 84% on top of President Trump's retal uh retaliatory tariffs. Well, Maria, I think it's unfortunate that the Chinese actually don't want to come and negotiate because they are the worst defenders in the international trading system. They have the most imbalanced economy in the history of the modern world. And you know I can tell you that this escalation is a loser for them that they they have some very smart the economist the
• 01:00 - 01:30 academicians technocrats within their bureaucracy and they would be telling the leadership that we do not have the edge here. They are the surplus country that their exports to the US are five times our exports to China. So, you know, they can raise their tariffs, but so what? So, I let's talk about this for a second because I I wonder I I agree with you. I mean, I think that China needs the
• 01:30 - 02:00 United States so much more than the US needs China, but the economies are so connected. Secretary, you know, we're buying all this cheap stuff. People expect things to be cheap and and we know it's because they they're made uh in China and and it feels like a soft war right now with with China. Are there any areas or opportunities to give companies the time to move those supply chains to America so that we don't have to rely so much on China? This can't happen overnight, right? Even though
• 02:00 - 02:30 China is the enemy, the number one adversary, and we are in this soft war, and they're escalating this right now. Are the near-term effects such that the US gets impacted negatively first? Uh well again um you know Maria no one wins in a war but it's proportionality and the proportionality for the Chinese is going to be much worse. And the other thing too is Maria what would be a very good a very good step with the Chinese
• 02:30 - 03:00 would be acknowledging that the precursor chemicals for fentanyl come from China. They make their way into North America and then are sold into the US. We have more than a 100,000 American citizens dying every year. And so China, a very good start would be for them to make a gesture on the precursor fentinels because you know distributing drugs in China is
• 03:00 - 03:30 punishable by death. Why don't they apply the same standards to the people who are exporting these chemicals to the US? Yeah. Well, it's it's true and that's and that's where this all started. President Trump said that he was putting tariffs in place on China as a result of their failure to stop the fentinol flow. But now people are wondering, is that still the reason to put tariffs on China? Is it to raise revenue? Is it to to to get supply chains into America? Is it to answer,
• 03:30 - 04:00 you know, the fentanyl problem? People, business leaders are saying to me, why are we doing this? Everyone was very excited about President Trump's agenda, deregulation, tapping into energy, tax cuts, and now, boom, with these tariffs, everything has changed. Why are we doing this? Well, Maria, I think it's, as you said in the last segment, it it's all of the above. You know, pre President Trump was elected with with a mandate. Uh, you know, he's closed the border, so check
• 04:00 - 04:30 on that. uh we are the doing uh the very large deportation of people criminals and people who have overstayed uh their their visits their their uh their period. So we are in the midst of that and now President Trump is tackling the trade agenda and you this isn't done in isolation Maria as you just interviewed Senator Hagerty. You we're running the
• 04:30 - 05:00 uh par parallel processes here. So there there's tariff, there's tax uh taxes tax is going extremely well that the speaker Johnson, leader Thun from the leadership of people like Senator Hagerty, uh Jason Smith, Senator Crapo, you know, I can tell you that that's going very well. So at at a point in the not too distant future, I think we will be back to firing on all cylinders. We we have the
• 05:00 - 05:30 the response to the countries who want to come and sit at the table rather than escalate has been overwhelming. Yeah. You know our our our allies Japan, South Korea, India and you know I I will note that they are all the around China we have Vietnam coming today. Yeah. So the everyone is coming to the table and basically China surrounded. The the other the other thing that
• 05:30 - 06:00 the the other thing that I would note is that um a Spanish official said today that maybe Europe should look to China instead of the US. And I can tell you that is a losing proposition for the Europeans because what is going to happen and we've already seen it starting last week that as we put up the tariff wall, China's business model is predicated on this incredibly imbalanced economy and exporting lowcost goods to
• 06:00 - 06:30 and subsidized goods to the rest of the world. And guess where they are going to land on the European shores. So uh we should our allies part of our discussion as our allies come in and talk to us is how do we get China to rebalance that is the the big win here that the the US is trying to rebalance toward more manufacturing. China needs to rebalance towards more consumption. If at a point
• 06:30 - 07:00 we can move to that then we can move together. Yeah. the if they will acknowledge this fentanyl problem. So the we have to have an end to these mercantalist policies. President Trump made that a priority just as taxes a priority. Well, this are all really important points and I want to get to tax in in a second. But um in in terms of the uh the message you you just sent a great message to the Europeans. Let's hope they get it. Uh in terms of the Chinese economy right now, you have to believe that 104% tariff on Chinese
• 07:00 - 07:30 goods coming in is going to have a huge impact on the Chinese economy. How how would you assess the Chinese economy right now? Well, look that they were in a recession/depression due to a real estate collapse that had a real estate bubble that is deflating that had been going on for years and the economy was in terrible shape. So again, uh they're going to go from bad to terrible and you
• 07:30 - 08:00 know that which is unsustainable will be unsustainable. The other thing that the Chinese should not do is try to devalue their way out of this because, you know, back to our European friends, uh, our Japanese allies, our Korean allies, the Vietnamese, if China starts devaluing, then that is a tax on the rest of the world and everyone will have to keep raising their tariffs to offset the devaluation. So, uh, I would urge them
• 08:00 - 08:30 not to do that and to come to the table. So, I mean, one more question on China, then I want to get to your talks on the on the tax extensions. Um, how far are you willing to take this in terms of this soft war with China? We've got Chinese stocks trading on US exchanges. Uh, you know, US investors are buying those stocks and that's helping China fund its military. Let's face it. Are you willing to go that far to remove Chinese stocks from US exchanges? Uh well uh Maria I think everything's on
• 08:30 - 09:00 the table. We are putting in process export controls for high high value uh security related goods. Uh we are talking about the capital export capital controls in terms of you know as you said the a a blacklist of things uh that US uh whether pension funds endowments investors should not be investing in to fund the Chinese military machine. So
• 09:00 - 09:30 but that'll be President Trump's decision. And you know what Maria at the end of the day President Trump chairman she have a very good personal relationship and I am confident that this will be resolved at the highest levels. Okay. The the president obviously is trying to build consensus on the tax cut extensions. The president met with House Republican holdouts yesterday. They're stalling the Senate budget bill over tax and spending cuts. Fox has told Trump moved some potential no votes to yes votes. You've been
• 09:30 - 10:00 meeting uh on Capitol Hill now for weeks, but House Freedom Caucus Chairman Andy Harris uh now says he's open to the creation of a 40% tax bracket for those earning $1 million or more. So, Mr. Secretary, are you planning on keeping taxes high, raising taxes for the rich in order to get the tax cuts uh like no tax on tips through? Uh Maria, that that the negotiations are moving along quickly. I I don't want to talk about anything that's in in the bill that it's
• 10:00 - 10:30 it's crazy to ne negotiate and the talk about specific things in a public forum. But I will tell you that the the progress has been substantial and I you know I want to compliment the speaker Johnson leader Thun Senator Crapo and the chairman Smith just so you know the house has been working on their bill for almost a year and in anticipation that we would be here. Leader Thoon and
• 10:30 - 11:00 Senator Crapo are moving this through the Senate very quickly and with President Trump's leadership, President Trump is now weighing in the with his preferred policies and you know, as you know, he is remarkably persuasive, especially when he speaks to Republican congressmen and and and I know that you're meeting with Republican Study Committee today. What will be victory for you in the coming couple of weeks before we know that a bill is headed to the president's
• 11:00 - 11:30 desk by the end of May, which is what Mike Johnson wants? What do you want to hear? That you have the votes in the Senate, that you have the votes in the House, to actually get a bill, including the tax extensions, done? That That's exactly it, Maria. That we we that we are moving in unison toward getting the bill done as quickly as possible. And Maria, don't forget that within reconciliation, we are going to have the debt ceiling. That is something that is playing in the background. Yeah.
• 11:30 - 12:00 So, we are going to do debt sealing through reconciliation. Uh the the so-called X date when the uh the government runs out of money. We will never we will never hit that. But, you know, if if we don't get something done in June, we will go on the warning track. And as every baseball player knows, you know, you don't want to be looking over your shoulder and hit the wall. Yeah. Secretary, what what is the
• 12:00 - 12:30 backup plan in the meantime? Because, you know, I understand the long-term issues and I certainly understand this as a national security issue. 100%. I get that. And and and and what the president is doing is monumental. No president has taken this on before. So we recognize the massive issues here. However, in the meantime, you're talking about $6 trillion in market value loss in a week. You're talking about CEOs now unwilling to give guidance for 2025. Is
• 12:30 - 13:00 there a response or a backup plan for what seems to be corporate America shutting down corporate activity? IPOs putting on put on the shelf, M&A deals put on the shelf, CEOs not giving guidance. I spoke with one CEO last night. He said, "We're cutting our capital expense budget. I'm cutting my travel budget. I'm doing everything I can in terms of cutting so I don't have to cut jobs yet, but that is of course on the horizon because we're cutting capital spending." What do you do in
• 13:00 - 13:30 that regard in the coming weeks and months as we see more CEOs talk that way? Well, I I think in the coming months CEOs won't have to talk that way. And what can what can we do in in the coming weeks is you know we we have opened this process of negotiations uh country by country it's going to be you know a bespoke tailored process for each country and you know as we strike these trade deals I think that we will see greater and greater certainty if we
• 13:30 - 14:00 have a a delegation from Vietnam and uh I was at the ambassador's residence the Japanese ambassador's residence here in DC for the cherry blossom festival last night which was fantastic and uh a Japanese delegation will be coming soon South Korea uh India uh the UK so I think we are going to see a rapid succession of these deals that will give CEOs greater certainty but I think
• 14:00 - 14:30 nothing gives greater certainty than getting this tax bill done. So, so what are the metrics and the milestones that we should be looking at that you know the market should be looking at to feel confident that this is working? You just named a number of countries. Is that what you want? Do you want to see three, five new deals in the coming months in order to feel like okay, we're getting somewhere? Well, that that will be on
• 14:30 - 15:00 trade and then you we talked about tax and then Maria I wanted to address in the meantime there there is one of these I I've seen it the very often in my market career there there's one of these deleveraging convulsions that's going on right now the in the markets and you know I think it it's in the fixed income market there's some very large leverage players ers who are experiencing losses
• 15:00 - 15:30 that are having to delever. I believe that there is nothing systemic about this. I think that it is an uncomfortable but normal deleveraging that's going on in the bond market and I expect that as we see the leverage come down uh the risk managers tapping people on the shoulders telling them to bring their books down which is what happens every couple years as leverage builds up then the market will calm down. The other thing I can tell you is I'm giving
• 15:30 - 16:00 a speech this morning at the American Bankers Association and we're going to be talking about the substantial financial deregulation that's pushing forward. And Maria, if if we think about President Trump's agenda, tariffs came first. Now we're going to get tax done. We are pushing for deregulation. And the deregulation, unfortunately, takes longer to kick in. But I tell you, when it does, it's going to be powerful. And part of the deregulation in in the banking industry
• 16:00 - 16:30 will be the changing what's called the supplementary leverage ratio, which will allow banks to buy more treasuries without a big capital charge. So, you know, I would expect that we have created a new buyer for treasury securities or a a larger uh more durable buyer. uh you know the the fixed income issue has been a debacle this morning and that is why I assume rates are moving up uh the yield on the 10-year.
• 16:30 - 17:00 We were wondering if there was a uh if there was a a deleveraging issue a and and whether or not China is dumping treasuries. Is that what you see right now? Is China dumping treasuries to try to put pressure on this uh this market? uh you know Maria I I think it works against their purposes if they are dumping treasuries because you know if they're dumping treasuries then they have to buy something else. if if they sell dollars then they strengthen their currency and as I said earlier they've
• 17:00 - 17:30 actually been weakening their currency which is a loser for everyone right and again when I when I hear all these stories that the dollar is no longer going to be the reserve currency you know if you end up with the Chinese who are willing to use their currency as a trade tool that doesn't seem like a very good reserve asset to me yeah very good point but the dollar has been plummeting you know that what's the impact act of that. Yes. Uh well, you know, again, I want to reiterate the US has a strong
• 17:30 - 18:00 dollar policy and part of it is the the overall some of the bilateral the the dollar versus the euro, the dollar versus the yen, the the Europeans are going to spend more on defense. So, we are seeing upgrades finally to European fiscal spending. And it was President Trump's pressure the on NATO on the military alliance to say pay your fair share. Yeah. And that will
• 18:00 - 18:30 that will bump their economy. In Japan the the yen has been strong but again that is the result of very strong Japanese economic growth rising inflation expectations. So the Bank of Japan is raising rates. So you know all all that's natural. Maria Secretary, I I have one more final question for you and I know that you gave a very thoughtful interview recently uh and you talked about the fact that we've got millions of people still in poverty right now.
• 18:30 - 19:00 You're about to give a speech. No doubt you're going to touch on the macro story and increasingly people are expecting that we are headed for a recession. I spoke with one CEO over the weekend. He said we are already in a recession. So, how do you deal with that as you are trying to implement all of these new policies like deregulation when you've got the the you know the market expecting a sharp slowdown in economic activity. Sir, uh well, Maria, I I think what the CEO
• 19:00 - 19:30 may have alluded to and I've said it in the past that the manufacturing sector under the previous administration was in a in a recession. So what what we are doing is what I call reprivatizing the economy. 80% of the job creation was either government jobs or government adjacent which is education and healthcare and you know this massive amount of government borrowing. So we are also getting the deficit under control, right sizing the federal
• 19:30 - 20:00 workforce and then on the other side we are they going to relever the private sector through smart safe and sound bank deregulation and then uh you know as this CEO said they can come out of recession because the I expect that long-term interest rates should come down as we get the budget under control, inflation under control, energy prices come down and then the private sector will have room to grow. Yeah. Well,
• 20:00 - 20:30 look, let let's hope that this huge population of people that President Trump delivered in that election, which includes Republicans, Democrats, and independents, will wait this out a and get to the other side uh and not uh continue this uh this loss of of value. But, Secretary, we appreciate your leadership. Thanks very much for being here this