Bessent Unveils Plan to Derisk US-China Trade Relations through Bilateral Institutions

US Treasury Secretary Scott Bessent has emphasized the need to derisk US-China trade relations, shifting the focus from decoupling to restructuring. Speaking at the BTG Pactual CEO Conference in Sao Paolo, Bessent outlined a new approach that aims to reduce exposure for both countries.

The proposed solution includes the creation of two bilateral institutions: a Board of Trade and a Board of Investment. These boards would identify non-strategic goods eligible for tariff reductions, covering around $30 billion worth of tariffs on each side.

While this number may seem significant, it represents only 2.5% of China's global trade surplus, estimated at $1.2 trillion. Bessent urged G20 partners to revisit their own trade terms with China, framing the surplus as a global problem rather than an American grievance.

The current state of US-China relations is described by Bessent as being in 'a very comfortable place.' His ongoing dialogue with Chinese Vice Premier He Lifeng has produced at least the appearance of mutual willingness to negotiate.