Bessent sees tariff agreement as progress in ‘strategic’ decoupling with China
Treasury Secretary Scott Bessent has highlighted that the recent trade agreement with China marks a significant step in reducing the U.S.’s dependence on Chinese imports. While the concept of “decoupling” from China has been a topic of discussion for some time, the process has been gradual and is unlikely to result in a complete separation.
Bessent emphasized that specific aspects of decoupling are now in place to safeguard U.S. interests. In 2024, the U.S. imported nearly $440 billion worth of goods from China, resulting in a trade deficit of $295.4 billion. The goal is not a complete decoupling from China, but rather a strategic disconnection to ensure resilient supply chains and protect critical industries.
The onset of the Covid-19 pandemic in 2020 exposed vulnerabilities in the U.S. supply chain, particularly in obtaining essential materials for various products, leading to supply shortages and an inflation surge. The trade agreement with China includes the suspension of reciprocal tariffs while maintaining broad-based 10% duties. This move aims to protect industries like steel, critical medicines, and semiconductors.
The agreement represents a 90-day pause in reciprocal duties, with specific tariffs remaining in place, including a 20% charge related to fentanyl. Bessent expressed optimism regarding China’s commitment to addressing the issue of fentanyl and assisting the U.S. in curbing the flow of precursor drugs. While no specific date has been set for the next round of talks, Bessent indicated that they are likely to occur within the next few weeks.
Overall, the trade agreement signifies a step towards safeguarding U.S. interests and strengthening supply chains. The focus on strategic decoupling from China aims to ensure the resilience of critical industries and reduce vulnerabilities in the U.S. economy. This ongoing dialogue between the U.S. and China is crucial for fostering a mutually beneficial trade relationship while addressing key concerns on both sides.
