WEBVTT - US Treasury Secretary Scott Bessent Talks US-China Agreement 0:00:02.520 --> 0:00:09.040 Bloomberg Audio Studios, Podcasts, radio news. Here's the latest this morning, 0:00:09.080 --> 0:00:11.600 the US and China agreeing to a ninety day cooling 0:00:11.600 --> 0:00:14.640 golf period, the US reducing its levies on Chinese imports 0:00:14.640 --> 0:00:17.520 from one hundred and forty five percent to thirty while 0:00:17.600 --> 0:00:19.840 China cuts duties on US goods from one hundred and 0:00:19.880 --> 0:00:23.279 twenty five percent to ten Joining US now to discuss 0:00:23.440 --> 0:00:26.640 the Treasury Secretary Scott Benson a driving force behind trade 0:00:26.680 --> 0:00:29.720 talks in Geneva over the weekend. Mister Secretary, welcome back 0:00:29.720 --> 0:00:31.920 to Bloomberg. Survelland sir, it's good to see you. 0:00:32.720 --> 0:00:35.000 Good afternoon from Geneva, Jonathan. 0:00:34.760 --> 0:00:37.040 Greater catch up as always, sir. Let's get into these 0:00:37.040 --> 0:00:40.040 talks over the weekend. One standout line for me and 0:00:40.120 --> 0:00:42.840 for many others was the line that the differences between 0:00:42.880 --> 0:00:45.479 the two sides weren't as large as we thought they 0:00:45.479 --> 0:00:48.599 would be. What were those differences, sir, and why were 0:00:48.600 --> 0:00:50.320 they smaller than you expected? 0:00:51.040 --> 0:00:55.080 Well, I think, Jonathan, what's important to know is for 0:00:55.920 --> 0:00:59.480 the tariff program, we had a plan, we had a process. 0:01:00.000 --> 0:01:03.360 We did not have a mechanism for engaging with the Chinese. 0:01:03.480 --> 0:01:09.160 So China was the only country who escalated their terriffs 0:01:09.160 --> 0:01:13.679 in response to our reciprocal tariff level. So that resulted 0:01:13.800 --> 0:01:19.080 in an unfortunate escalation. So we now have a mechanism 0:01:19.160 --> 0:01:24.440 to deal with that. Neither side wants a generalized decoupling. 0:01:24.680 --> 0:01:29.120 The US is going to do a strategic decoupling in 0:01:29.240 --> 0:01:37.040 terms of the items that we discovered during COVID were 0:01:37.200 --> 0:01:42.319 of national security interest, whether it's semiconductor's, medicine, steel, So 0:01:43.000 --> 0:01:47.840 we still have generalized terraffs on some of those, but 0:01:48.840 --> 0:01:53.440 both sides agreed we do not want a generalized decoupling. 0:01:54.120 --> 0:01:56.920 These things tay time. As you know, sir, we've got 0:01:57.000 --> 0:01:59.200 ninety days now to work with. Last time around, it 0:01:59.240 --> 0:02:01.920 took eighteen months to reach an agreement on purchase agreements. 0:02:01.920 --> 0:02:03.440 I think you yourself has said in the past that 0:02:03.480 --> 0:02:05.520 it can take two to three years to have a 0:02:05.520 --> 0:02:09.160 full comprehensive trade agreement with the country, between the US 0:02:09.200 --> 0:02:11.880 and China. What do you think is achievable, sir, over 0:02:11.919 --> 0:02:12.919 the next ninety days. 0:02:13.800 --> 0:02:18.040 Well, Jonathan, we're going to see. But what has to 0:02:18.080 --> 0:02:21.080 happen is it has to be fair for the American people. 0:02:21.440 --> 0:02:26.040 But in January twenty twenty, President Trump produced a template 0:02:26.240 --> 0:02:32.840 we had an excellent trade agreement with China and the 0:02:32.840 --> 0:02:37.320 Biden administration chose not to enforce it. The Chinese delegation 0:02:37.520 --> 0:02:41.360 basically told us that once President Biden came into office, 0:02:41.560 --> 0:02:46.200 they just ignored their obligations. So we all already have 0:02:46.639 --> 0:02:50.040 a large framework. The other thing to remember here, Jonathan, 0:02:50.560 --> 0:02:54.120 is that this is a pause down to ten percent. 0:02:54.800 --> 0:02:59.360 The April second level for China is thirty four percent, 0:03:00.040 --> 0:03:05.120 so we will be working to see where their final 0:03:05.200 --> 0:03:10.440 reciprocal number ends up. And the negotiations are a combination 0:03:10.760 --> 0:03:16.280 of tariffs, non tariff, trade barriers, currency manipulation, and subsidies 0:03:16.639 --> 0:03:18.400 of labor and capital. 0:03:19.040 --> 0:03:20.680 Just to build on that, as I listened to you, 0:03:20.800 --> 0:03:23.680 do you consider the new levels as a ceiling or 0:03:23.680 --> 0:03:24.560 a flaw? 0:03:25.280 --> 0:03:26.200 Well, it's obvious. 0:03:26.600 --> 0:03:32.240 It's obviously a floor that they are now with everyone 0:03:32.280 --> 0:03:37.240 else who did not retaliate. So the levels have come 0:03:37.320 --> 0:03:41.200 down to the Palls level, and what I would say 0:03:41.520 --> 0:03:47.320 is thirty four which is their assigned April second level, 0:03:47.360 --> 0:03:49.480 would be a ceiling, which is what I went out 0:03:49.560 --> 0:03:52.600 and told people on April second, which. 0:03:52.360 --> 0:03:53.560 Is why I was surprised. 0:03:53.600 --> 0:03:58.320 Market participants panicked because we had kept We had kept 0:03:58.800 --> 0:04:03.640 the upside for every country and if they didn't retaliate. 0:04:03.920 --> 0:04:07.400 So this unfortunate turn of events happened because. 0:04:07.200 --> 0:04:10.600 Of retaliation, but now we have the. 0:04:13.160 --> 0:04:17.080 A process in place to avoid escalation like that. 0:04:17.200 --> 0:04:19.680 Again, Secretary Beston, just to build on that, are you 0:04:19.760 --> 0:04:22.640 saying that tariff rates will only go up from here? 0:04:23.040 --> 0:04:25.479 If this really is a floor of ten percent on 0:04:25.520 --> 0:04:29.919 the Chinese side and thirty percent on the US side. 0:04:30.839 --> 0:04:33.919 I'm not saying that they're going to go up, but 0:04:35.839 --> 0:04:39.200 it would be implausible that they would go below ten. 0:04:40.440 --> 0:04:43.080 One thing that you've been talking about is generalized to 0:04:43.160 --> 0:04:45.800 coupling is something that's not necessarily in the interest of 0:04:45.839 --> 0:04:47.560 either side, and either side wants that. 0:04:48.200 --> 0:04:49.800 What about a strategic to coupling. 0:04:50.080 --> 0:04:53.919 What is the appropriate rate of tariffs that could potentially 0:04:54.320 --> 0:04:56.880 cause some sort of strategic to coupling in the sectors 0:04:56.880 --> 0:04:58.440 that you are talking about. 0:04:59.279 --> 0:05:08.600 Well, look, bringing back our strategic are important. Strategic industries 0:05:08.839 --> 0:05:09.200 can be. 0:05:09.120 --> 0:05:11.800 A result of terrorists, but it's also a result of 0:05:11.880 --> 0:05:16.960 national will. So this administration is running full speed to 0:05:17.040 --> 0:05:21.520 make sure that what we saw during COVID never happens again. 0:05:22.160 --> 0:05:26.680 So it's a combination of it can be terrorists, but again, 0:05:27.360 --> 0:05:31.159 it is the administration moving as quickly as possible to 0:05:31.320 --> 0:05:35.360 make sure that we are self sufficient in the strategic industries. 0:05:35.600 --> 0:05:39.359 I think that's completely understandable from the United States side, 0:05:39.480 --> 0:05:41.479 and I want to miss the secretary whether the Chinese 0:05:41.560 --> 0:05:44.200 understood that. Did you get the sense they do understand 0:05:44.200 --> 0:05:46.760 that that will be the road forward for the United States. 0:05:49.600 --> 0:05:52.800 Well, I think they understand that, and I think they 0:05:52.920 --> 0:05:57.400 understand that we are focused on fair trade, that this 0:05:57.760 --> 0:06:03.279 gigantic depth that we have with them, that it didn't 0:06:03.320 --> 0:06:06.120 happen last year, it didn't happen there before, It's happened 0:06:06.120 --> 0:06:10.520 over decades, and that this happened half excuse me, has 0:06:10.560 --> 0:06:15.760 to be remedied. The China shock gutted our manufacturing sector, 0:06:15.920 --> 0:06:17.400 and we want to bring that back. 0:06:17.800 --> 0:06:18.719 On the other side. 0:06:19.080 --> 0:06:22.680 Party chair she has said that he would like to 0:06:22.720 --> 0:06:29.279 increase consumption, but to date the Chinese have just increased manufacturing. 0:06:29.680 --> 0:06:32.800 So we would like to see them increase consumption. We 0:06:32.839 --> 0:06:36.240 would like to see them open their market to American products. 0:06:36.279 --> 0:06:40.919 So there are two ways to rebalance. One is fewer 0:06:41.600 --> 0:06:42.800 Chinese goods in. 0:06:42.720 --> 0:06:43.760 The US market. 0:06:44.279 --> 0:06:47.720 The other is more American goods in the Chinese market. 0:06:47.880 --> 0:06:51.880 And my guess is that the answer is somewhere in between. 0:06:52.200 --> 0:06:54.000 Some of this, of course, takes us back to the 0:06:54.040 --> 0:06:57.159 purchase agreements of the first term of the president. Is 0:06:57.160 --> 0:06:59.360 it different this time around? Is it as simple as 0:06:59.400 --> 0:07:01.800 just revisit seeing those purchase agreements or do you say 0:07:02.200 --> 0:07:04.039 additional sectors being targeted? 0:07:05.920 --> 0:07:10.560 Jonathan, I think everything's on the table. But the Phase 0:07:10.600 --> 0:07:14.160 one purchase agreements is a very good roadmap because I 0:07:14.200 --> 0:07:18.440 will point out that during twenty twenty China met their 0:07:18.480 --> 0:07:22.640 obligations under that agreement. It was only under President Biden 0:07:23.120 --> 0:07:28.040 where they neglected them. So we are getting we are 0:07:28.080 --> 0:07:33.280 starting there, and look, the world has changed. Products have changed, 0:07:33.360 --> 0:07:37.520 product mix has changed. So I think everything's on the table. 0:07:37.840 --> 0:07:40.280 But the main thing here is we have to have 0:07:40.480 --> 0:07:44.520 a fair deal for the American people. And keep in 0:07:44.560 --> 0:07:48.560 mind too that we also have twenty percent finanyl terras 0:07:48.600 --> 0:07:52.840 on so we were at th for twenty twenty five. 0:07:53.640 --> 0:07:56.560 We have put on thirty percent terras. They have put 0:07:56.600 --> 0:08:02.600 on ten. And my economic observation is that businesses just 0:08:02.680 --> 0:08:07.080 need time to calibrate. That we saw approximately twenty percent 0:08:07.200 --> 0:08:13.239 teriffs from President Trump's first term. Businesses calibrated, supply chains, 0:08:13.960 --> 0:08:19.280 moved We have seen twenty percent tariffs President Trump put 0:08:19.360 --> 0:08:25.320 on in February due to the fentanyl crisis calibration very 0:08:25.400 --> 0:08:30.640 little disruption, and now a ten percent additional tariff should 0:08:30.680 --> 0:08:32.280 mean very little disruption. 0:08:32.840 --> 0:08:35.520 Mister Secretary, A lot of people are wondering what caused 0:08:35.520 --> 0:08:38.640 the softening and tone, the reason for both sides to 0:08:38.679 --> 0:08:40.960 come together and be able to have this kind of 0:08:41.000 --> 0:08:44.240 negotiation and try to pass forward where there will be 0:08:44.280 --> 0:08:48.079 further negotiations in the near term. What's your interpretation of 0:08:48.160 --> 0:08:50.240 what caused both sides to come to the table. 0:08:51.400 --> 0:08:57.280 Well, I think that the two levels on the reciprocal tariffs, 0:08:57.280 --> 0:09:01.360 when they both ratcheted up to one twenty five, caused 0:09:01.360 --> 0:09:05.720 the equivalent of an embargo, and that wasn't good for 0:09:05.960 --> 0:09:10.040 either side. Where the depth is the country, so less 0:09:10.040 --> 0:09:14.040 bad for us. But I think there was the unintended 0:09:14.080 --> 0:09:19.400 consequence of this very fast ratchet, and so now both sides. 0:09:19.160 --> 0:09:19.680 Are at ten. 0:09:20.440 --> 0:09:24.120 We will be moving forward with a ninety day pause, 0:09:24.480 --> 0:09:27.439 and the important thing to remember is that we can 0:09:27.559 --> 0:09:30.840 always go back to the April second level. But my 0:09:30.960 --> 0:09:38.760 sense is we had very good discussions. My counterpart was 0:09:39.320 --> 0:09:43.520 the very firm but very engaged and I think we 0:09:43.679 --> 0:09:46.640 have set the stage for meaningful discussions. 0:09:47.320 --> 0:09:51.000 Mister secretary, is there already a scheduled date for Jijian 0:09:51.080 --> 0:09:54.120 Ping and President Trump to meet in person at any 0:09:54.120 --> 0:09:55.600 point in the near term? Do you think that that 0:09:55.800 --> 0:09:59.080 is something in the cards as part of these negotiations. 0:10:00.240 --> 0:10:02.200 I think that there would be a phone call before 0:10:02.240 --> 0:10:08.040 a meeting, and there's nothing on the calendar, but I 0:10:08.080 --> 0:10:11.600 could imagine that that could happen in the coming weeks 0:10:11.640 --> 0:10:12.200 or months. 0:10:12.559 --> 0:10:15.000 Coming into the meeting. As you know, the President put 0:10:15.040 --> 0:10:17.480 out a social media post he referred to as Scotty b. 0:10:17.720 --> 0:10:21.040 I won't go there, We'll keep using, mister secretary, and 0:10:21.080 --> 0:10:23.400 he said, you could go as low as eighty. Can 0:10:23.440 --> 0:10:25.719 you share with us how we went from, say, eighty 0:10:26.080 --> 0:10:27.960 down to thirty. Where did that number come from? 0:10:28.000 --> 0:10:28.200 Sir? 0:10:29.840 --> 0:10:34.520 I think that in the President's mind, eighty was a 0:10:34.640 --> 0:10:39.839 number that did not cause an embargo, so we could 0:10:40.080 --> 0:10:44.280 still be at eighty and have trade flowing. But we 0:10:44.280 --> 0:10:49.360 were able to both the moved down by one hundred 0:10:49.400 --> 0:10:53.400 and fifteen percent. And Jonathan, I think the other important 0:10:53.480 --> 0:10:56.000 thing here is I think this is the first time 0:10:56.559 --> 0:10:59.920 that the Chinese have addressed one of the President's real priority, 0:11:00.200 --> 0:11:03.320 which is ending this fentanyl crisis in the United States. 0:11:03.760 --> 0:11:06.600 So they brought their trade team and they brought a 0:11:06.679 --> 0:11:11.880 Vice Minister for State Security who met with our national 0:11:11.920 --> 0:11:15.679 security team. It was a separate meeting, and they had 0:11:15.720 --> 0:11:22.000 a very robust and detailed discussion on ways to stop 0:11:22.800 --> 0:11:28.319 the transport of precursor drugs from China to North America 0:11:28.400 --> 0:11:30.800 that ends up in the hands of the cartels that 0:11:30.920 --> 0:11:35.600 is then killing several hundred thousand Americans a year. So 0:11:35.679 --> 0:11:41.200 I'm very optimistic that President Trump we have solved part 0:11:41.240 --> 0:11:44.520 of the fentanyl crisis by securing the border, and I 0:11:44.559 --> 0:11:48.400 think this is the next step on that. So if 0:11:48.600 --> 0:11:52.679 over the coming months we were to see excellent engagement 0:11:52.840 --> 0:11:57.559 from the Chinese and solutions towards solving the fentanyl crisis, 0:11:57.840 --> 0:12:00.439 I think we could see some amount of the ventanyl 0:12:00.480 --> 0:12:03.959 tariffs perhaps come off, but that is going to take 0:12:04.400 --> 0:12:05.920 actions from them. 0:12:06.080 --> 0:12:10.680 What kind of action specifically, say, well, we can. 0:12:10.559 --> 0:12:14.320 See where these precursor drugs are coming from from. 0:12:15.120 --> 0:12:17.520 At Treasury. 0:12:18.000 --> 0:12:24.160 Financial Criminal Enforcement Network has very good visibility into international finance. 0:12:24.480 --> 0:12:27.720 We can see these Chinese companies that are selling the 0:12:27.760 --> 0:12:32.480 equipment for making the pills, that transferring the precursor drugs 0:12:32.520 --> 0:12:33.439 to the cartels. 0:12:34.400 --> 0:12:36.599 US Treasury has declared. 0:12:36.640 --> 0:12:42.400 The Mexican cartels foreign terrorist organizations, so working with Chinese 0:12:42.559 --> 0:12:48.280 leadership to stop this would be a very tangible symbol. 0:12:49.120 --> 0:12:54.679 In China, the narcotics distribution is punishable by death, and 0:12:55.040 --> 0:12:58.439 we're not pushing for that necessarily, but we are pushing 0:12:58.679 --> 0:13:03.800 for very very strict enforcement, similar to what they do 0:13:03.880 --> 0:13:04.240 at home. 0:13:04.640 --> 0:13:07.760 Mister Secretary, I imagine you're incredibly tired, and a lot 0:13:07.800 --> 0:13:09.560 of people were very excited to see you taking the 0:13:09.640 --> 0:13:12.719 lead in these discussions, certainly in the market. Are you 0:13:12.760 --> 0:13:15.200 going to be taking the lead going forward with other 0:13:15.679 --> 0:13:19.680 difficult negotiations around the world with different trading partners. 0:13:21.520 --> 0:13:25.240 I've been involved in most of the Asia negotiations. We 0:13:25.320 --> 0:13:30.920 had a very good negotiation with Or, We've had two 0:13:31.000 --> 0:13:33.120 rounds of negotiations with Japan. 0:13:33.200 --> 0:13:35.240 I've been involved with Korea. 0:13:35.600 --> 0:13:41.960 I've met with the Vietnam and excuse me, also Indonesia. 0:13:42.080 --> 0:13:45.960 So my focus has been on the Asia region thus far. 0:13:46.440 --> 0:13:50.440 And then the trade team had a great victory with 0:13:50.600 --> 0:13:56.040 the UK putting together the contours of the first trade deal. 0:13:56.360 --> 0:13:58.040 The other thing I want to say too, is my 0:13:58.160 --> 0:13:59.960 partner here in Geneva and Best. 0:14:00.080 --> 0:14:02.439 Her career was an incredible asset. 0:14:02.640 --> 0:14:08.440 He has years of experience, a broad and deep knowledge 0:14:08.840 --> 0:14:10.679 of trade, negotiation, of. 0:14:10.679 --> 0:14:12.160 The numbers and the nuance. 0:14:12.360 --> 0:14:16.839 And we would not be here today without ambassador career. 0:14:16.880 --> 0:14:18.920 Missus Secretary, just before you go, you've promised us a 0:14:18.960 --> 0:14:20.600 lot of time. We've used up most of it already. 0:14:20.640 --> 0:14:23.440 Just the final question, what does victory look like for 0:14:23.520 --> 0:14:26.360 you in six months time when we get to year end? 0:14:26.640 --> 0:14:28.280 And I know it's frustrated to you that we've only 0:14:28.280 --> 0:14:30.520 been talking about trade, that we haven't focused on the 0:14:30.560 --> 0:14:34.000 full policy platform. Where do you want to be by 0:14:34.080 --> 0:14:34.520 year end? 0:14:36.200 --> 0:14:41.440 Well, well, Johnathan, this administration is doing peace deal, trade deal, 0:14:41.600 --> 0:14:45.120 tax deal. I try to state mostly as you know 0:14:45.200 --> 0:14:51.920 in my econ lane. So from that lane, victory to 0:14:52.000 --> 0:14:56.760 me looks like the three legged stool that really are 0:14:56.840 --> 0:14:59.360 the three parts of our program. 0:14:59.000 --> 0:14:59.800 Really kicking in. 0:15:00.360 --> 0:15:04.880 So we will have most of the trade and tariffs settled. 0:15:05.480 --> 0:15:07.240 The tax bill is. 0:15:07.160 --> 0:15:10.040 Moving along very well, better than I could have imagined. 0:15:10.560 --> 0:15:15.280 Speaker Johnson, leader Thun are doing an incredible job with 0:15:15.440 --> 0:15:19.360 President Trump's leadership. So we will have tax done and 0:15:19.400 --> 0:15:23.520 then the final piece that is longer lagged, but perhaps 0:15:23.600 --> 0:15:30.160 the most important is deregulation and deregulation. We are deregulating 0:15:30.400 --> 0:15:34.960 across all industries every day. President Trump is committed to 0:15:35.120 --> 0:15:38.800 for every new regulation, ten comes off the books. And 0:15:39.760 --> 0:15:43.160 deregulations should start kicking in in the third. 0:15:42.920 --> 0:15:44.000 And the fourth quarters. 0:15:44.320 --> 0:15:50.400 So tax, trade and deregulation all coming together at the 0:15:50.600 --> 0:15:53.240 end of the year. I think it's going to be very, 0:15:54.240 --> 0:15:57.160 very powerful for President Trump's economic agenda. 0:15:57.520 --> 0:16:01.680 Mister Treasury Secretary Scope person, at your time, sir from Geneva. 0:16:01.920 --> 0:16:02.960 Very generous with your time.