Bessent urges G20 to rethink China trade ties, warns of weekly new Iran sanctions

US Treasury Secretary Scott Bessent is set to use a meeting of G20 finance leaders to push for a tougher global response to China's swelling trade surplus and Iran's access to the international financial system.

Speaking ahead of the G20 finance leaders' meeting in Asheville, North Carolina, Bessent said other countries need to reconsider their trading relationship with China as Beijing increasingly relies on exports to support a weak domestic economy.

“The world cannot have a China with a $1.2 trillion trade surplus,” Bessent said in an interview on Sunday (August 30). “In China, the economy is quite weak, and they are trying to export their way out of it, and they need to rebalance their economy.”

Bessent's argument is that while US tariffs have reduced America's own trade imbalance with China, they haven't solved the broader problem. Instead, some Chinese goods that might otherwise have gone to the US are increasingly finding their way into other markets, particularly Europe and Latin America.

“The rest of the world is going to have to examine their terms of trade with China,” he said.

The US is seeking a joint G20 statement calling for reductions in trade and current-account imbalances.

US-China trade gap shrinks

The US has sharply restricted imports of Chinese goods through tariffs and, in some cases, outright bans. Chinese automobiles, for instance, face barriers that have effectively kept them out of the US market.

Those measures have helped reduce America's trade deficit with China.

The US goods trade deficit with China fell by a third in the first six months of 2026 from the same period a year earlier to $73.9 billion, according to US Census Bureau data.

But Bessent said the shift has left other major economies facing a choice over how they respond to China's excess production and export push.

He said he had warned other industrialised economies last year that they would increasingly feel the pressure from Chinese imports.

“Now they are confronted with some very stark choices,” he said.

At the heart of the US argument is a longstanding imbalance within China's economy. Washington wants Beijing to rely less on factories and exports to drive growth and more on spending by Chinese households.

Bessent also pushed back against suggestions that a stronger Chinese yuan could largely solve the problem.

Some economists and European policymakers have suggested an international effort similar to the 1985 Plaza Accord, when major economies agreed on measures that helped weaken the US dollar against other major currencies.

The International Monetary Fund has estimated that China's yuan could be undervalued by as much as 21%.

Bessent, however, said focusing on currencies would avoid the underlying problem: heavy Chinese industrial subsidies and weak domestic demand.

He called the idea of another Plaza Accord “an easy way to get around dealing with the real trade problem.”

US, China could remove tariffs on some goods

The comments come ahead of an expected White House meeting between US President Donald Trump and Chinese President Xi Jinping in late September.

Bessent said it was unclear whether he would meet Chinese Vice Premier He Lifeng in person before the Trump-Xi summit.

US and Chinese officials are expected to continue discussions on potentially lowering tariffs on goods that aren't considered strategically important.

“I think that there probably are $30 billion of non-strategic, non-critical goods on each side that we could take the tariffs off,” Bessent said.

The two sides are also expected to discuss safeguards around artificial intelligence, including ways to prevent powerful AI models from reaching non-state actors.

The talks come as the Trump administration rebuilds parts of its tariff regime after the US Supreme Court struck down broad duties imposed using emergency powers, including a 20% tariff on Chinese imports.

The administration subsequently imposed a 12.5% tariff on Chinese imports in July following an investigation into forced labour and is considering further tariffs tied to excess industrial capacity.

Bessent is also scheduled to meet People's Bank of China Governor Pan Gongsheng on the sidelines of the G20 meeting.

Bessent warns of weekly Iran sanctions

China won't be the only country in focus at the G20 gathering.

Bessent said the US Treasury Department is preparing to announce new secondary sanctions aimed at Iran potentially every week, starting with banks and other institutions that help Tehran access the global financial system.

The campaign, called “Operation Economic Outcast,” was launched last week.

On Friday, the US imposed penalties on the UAE branches of Egypt's Banque Misr over alleged financial links to Iran. Bessent said Washington could go further by cutting institutions entirely out of the dollar-based financial system.

“You're going to see a lot more of these every week,” he said. “We're starting with the banks, and we're telling the banks it's not okay to have Iranian money and to aid the regime.”

Secondary sanctions differ from direct sanctions on Iran because they can punish companies, banks or other entities in third countries for continuing to do business with sanctioned Iranian entities.

Bessent said he plans to use the G20 meeting to urge finance ministers and central-bank governors to sever economic links with Tehran — or risk being caught by the US measures.

“There can be no leakage,” he said. “You're either with us or you're with the Iranians.”

Bessent, however, rejected arguments that the sanctions campaign could only succeed if Washington imposed secondary sanctions on Chinese companies buying Iranian oil.

He said most Chinese purchases of Iranian crude had already been curtailed by the US blockade of Iranian ports, while the amount of Iranian oil remaining in tankers was declining.

“Problem solved,” Bessent said.