Bessent Pushes Joint Tariffs on China as Calls Grow for a New Plaza Accord

“We can’t withstand cheap Chinese goods any longer”

Bessent pushes joint tariffs on China

Treasury chief to urge countries at G-20 finance meeting to erect trade barriers

U.S. official says China’s trade surplus could hit $1.2 trillion

How much exports are curbed depends on other countries’ response

Pressure on Beijing shifts to a multilateral framework

Calls also grow for a “second Plaza Accord”

aimed at lifting the yuan

Bessent moves to widen the trade war

Scott Bessent, the U.S. Treasury secretary, told Reuters on Aug. 30, a day before a meeting of G-20 finance ministers, that he would urge the group to reconsider trade terms with China as a way to reduce global imbalances. He is effectively calling on other G-20 countries to join the U.S. campaign by imposing high tariffs on Chinese goods and banning imports of some products.

Bessent also argued that China should be pressured to strengthen domestic demand rather than rely on exports. In his view, weak consumption at home is leading China to ship excess output abroad at low prices, undermining manufacturing in importing countries and leaving them with trade deficits and rising debt. Whether China can be stopped from offsetting weak domestic demand with exports depends on how other countries respond, he said.

The move is widely seen as an attempt to recast the trade war with China into a multilateral pressure campaign. China’s trade surplus has continued to expand despite U.S. efforts to contain it. Data from China’s General Administration of Customs and Goldman Sachs show the surplus rose to $1.189 trillion last year from $676.4 billion in 2021, and is projected to reach $1.2 trillion this year. The increase reflects a diversion effect, with Chinese goods squeezed out of the U.S. market flowing instead into Europe and Latin America.

Pressure also targets the yuan

China’s trade surplus translates directly into deficits for its trading partners. Bessent has warned that the global economy cannot continue to absorb Chinese surpluses exceeding $1 trillion a year.

Concern over China’s export push is also mounting globally. Some have called for a new Plaza Accord with China for the first time in 30 years to counter what they describe as an export assault. The 1985 Plaza Accord was a coordinated international currency policy agreement among the U.S., Japan, West Germany, the U.K. and France to weaken the dollar and drive up the yen. Its purpose was to reduce the U.S. trade deficit.

The newer proposal differs from the 1985 agreement. It focuses on raising the value of the yuan, which the Council on Foreign Relations says is undervalued by as much as 35% relative to fair value. A weaker yuan gives Chinese goods a stronger price advantage in export markets. Goldman Sachs estimates China’s production costs are lower than those of overseas rivals by about 32% for electric vehicles, 38% for refrigerators and 53% for shoes.

One proposal circulating in U.S. business circles would have major economies impose joint tariffs on Chinese goods and then lower them if China allows the yuan to appreciate. The Wall Street Journal argued that the goal should not be to weaken an overvalued dollar, but to raise the value of an undervalued Chinese yuan.

Can a united front be built?

The European Union, which ran a $412 billion trade deficit with China last year, is highly wary of Chinese goods. But it also cannot ignore its heavy dependence on trade with China. Latin American countries including Brazil may also be reluctant to support sweeping trade barriers against China. That helps explain why it remains unclear whether G-20 countries will fully embrace Washington’s call.

Trade talks between the EU and China scheduled for October may become a key test of whether broader multilateral pressure on Beijing can take shape. There is also analysis suggesting the U.S. will need to offer incentives if it wants to secure cooperation from G-20 countries.

Hwang Jung-soo, New York correspondent / Lee Hye-in, reporter hjs@hankyung.com