Treasury Secretary Bessent Outlines U.S.-China Trade Strategy in Geneva Talks

In a significant diplomatic breakthrough, the United States and China have agreed to a 90-day pause in escalating tariffs, Treasury Secretary Scott Bessent revealed in a detailed interview with CNBC’s “Squawk Box.” The agreement, reached during high-level talks in Geneva, reduces tariffs on Chinese goods from 34% to 10%, while maintaining a 20% tariff related to fentanyl precursors.

“This is a 90-day pause for our tariff program,” Bessent explained. “We had a plan, we had a process, and now what we have with the Chinese is a mechanism to avoid the upward tariff pressure like we did last time.”

The negotiations, which Bessent characterized as respectful yet firm, echo the dynamic established during President Trump’s first term. “President Trump and his first term realized a very effective trade deal that was signed in the Oval Office in January 2020,” Bessent noted, adding that “the Chinese delegation basically messaged to us that the Biden administration failed to hold them accountable for it.”

While market reaction has been positive, questions remain about how this pause aligns with the administration’s stated goals of pressuring China and reshoring manufacturing. Bessent emphasized that strategic decoupling remains a priority in key sectors.

“We do not want a generalized decoupling from China. But what we do want is a decoupling for strategic necessities, which we were unable to obtain during Covid,” he said. “We realized that efficient supply chains were not resilient supply chains. So we are going to create our own steel, protect our steel industry, work on critical medicines, on semiconductors.”

The Treasury Secretary highlighted that addressing non-tariff barriers represents a significant challenge and opportunity. “China actually has low tariffs. It’s these insidious non-tariff trade barriers that hurt American companies trying to do business there,” Bessent explained. “One of the goals here is to open China for American businesses in a fair way.”

Progress on fentanyl precursors represents another critical aspect of the talks. “This is a priority for President Trump and indeed the whole administration,” Bessent said, noting that the Chinese delegation included a deputy minister for security who was a “fentanyl expert,” suggesting a new seriousness from Beijing on the issue.

The agreement establishes what Bessent called the “Geneva Mechanism” for ongoing dialogue. “I would imagine that in the next few weeks we will be meeting again to get rolling on a more fulsome agreement,” he stated.

Regarding economic concerns, Bessent expressed confidence that the calibrated approach to tariffs wouldn’t harm U.S. growth. “If we were going to see any kind of an economic downside from [the February fentanyl tariffs], it would already be apparent, I would think. And the economic data has surprised on the upside.”

The Treasury Secretary’s comments reflect a nuanced approach to U.S.-China trade relations, balancing immediate economic concerns with longer-term strategic objectives. As negotiations continue over the 90-day window, both nations will test whether this pause represents a genuine reset or merely a temporary respite in ongoing tensions.