Treasury Secretary Scott Bessent reaffirmed the Trump administration’s economic strategy Wednesday, emphasizing plans for trade alliances with key partners to counter China while brushing off fears of a financial meltdown.
Speaking at the American Bankers Association meeting in Washington, Bessent said the administration is working toward coordinated trade agreements with allies such as Japan, South Korea, and India. He made clear the goal is to form a unified front in pressuring China’s economic model. “We can probably reach a deal with our allies,” Bessent said. “They’ve been good military allies, not perfect economic allies. And then we can approach China as a group.”
Bessent issued a direct warning to Europe, especially Spain, not to undermine U.S. efforts with unilateral deals with Beijing. “That would be cutting your own throat,” he said, referencing recent Spanish interest in deeper economic ties with China.
He compared China’s economy to the uncontrolled chaos in Disney’s Fantasia, saying, “They keep producing and producing, and dumping and dumping.” Bessent argued that China’s export-driven model is flooding global markets at an unsustainable rate, causing distortions that hurt domestic manufacturing in the U.S. and other nations.
While China continues to retaliate with tariffs and currency devaluation, Bessent noted that other Asian countries are seeking constructive negotiations rather than confrontation. The administration’s strategy aims to isolate Beijing through economic unity with allies.
Earlier that day, Bessent addressed concerns over a spike in Treasury bond yields. On Fox Business, he dismissed talk of a financial crisis, calling the recent volatility a result of “normal deleveraging.” He explained that large leveraged investors are pulling back due to losses, not because of any systemic instability.
“In the fixed-income markets, there are some very large leveraged players who are experiencing losses,” he said. “They are having to deleverage.” He added that risk managers are already reducing exposure, which should stabilize the markets.
The 10-year Treasury yield briefly surged past 4.5 percent, sparking concern from Trump critics. Former Treasury Secretary Larry Summers warned of a “serious financial crisis” caused by Trump’s tariffs. Bessent strongly rejected that claim, saying most business leaders still describe the U.S. economy as “very solid.”
