Treasury Secretary Scott Bessent said on Monday that the trade deal reached over the weekend relied on Chinese products for another stage in the US.
The US has “decups” itself due to the need for cheap imports from China, which has been discussed for years, but this process is slow and unlikely to mean a complete break.
But Bessent said there are currently certain elements of separation that are essential to US interests. The US imported approximately $440 billion in goods from China in 2024, with a trade deficit of $295.4 billion.
“We don’t want generalized decoupling from China,” he said in an interview with CNBC’s “Squawk Box.” “But what we want is strategic essential decoupling, something we can’t get during Covid, and we realised that an efficient supply chain is not a resilient supply chain.”
When the pandemic hit in 2020, demand in the US had been more dependent on services and focused on products. That meant it was difficult to obtain materials for multiple products, including high ticket equipment and automobiles. The technology industry, which relies on semiconductors, was also hit. The subsequent surge in inflation in the US, which was not seen for over 40 years.
The details of the US-China agreement remain rough, but US officials say that so-called mutual tariffs will be suspended, but the broad 10% job is still in effect.
“We create our own steel. We protect the (customs) steel industry. They are working on key medicines in semiconductors,” says Bessent. “We do that and mutual tariffs have nothing to do with any particular industrial tariffs.”
The agreement between the two parties is essentially a 90-day suspension, leaving the 10% tariff and 20% fees related to fentanyl still in place, but mutual obligations will be suspended.
Bescent expressed encouragement to the fentanyl issue, saying that Chinese officials are “currently working seriously to help the US stop the flow of precursor drugs.” Bessent did not indicate a specific date when the next round of talks will be held, but indicated that it will be in the coming weeks.
