The Blubber

Treasury Secretary Scott Bessent said Tuesday that the United States holds a significant advantage over China as the two nations escalate their trade dispute, arguing that Beijing's latest tariff response is a strategic misstep.

“I think it was a big mistake, this Chinese escalation, because they’re playing with a pair of twos,” Bessent said during an appearance on CNBC’s Squawk Box. “What do we lose by the Chinese raising tariffs on us? We export one-fifth to them of what they export to us, so that is a losing hand for them.”

His remarks come just one day before the U.S. is scheduled to increase duties on Chinese imports and dozens of other countries, part of what Bessent described as “reciprocal tariffs” designed to drive trading partners to the negotiating table and help bring jobs back to the U.S.

Bessent noted that Japan has already shown enthusiasm for negotiations, and the White House expects other trade partners to follow suit.

“I think you are going to see some very large countries with large trade deficits come forward very quickly,” he said. “If they come to the table with solid proposals, I think we can end up with some good deals.”

The long-term goal, Bessent added, is to create jobs and generate revenue, even as tariffs serve as a short-term tool.

“If we put up a tariff wall, the ultimate goal would be to bring jobs back to the U.S. But in the meantime, we will be collecting substantial tariffs,” he said. “If we’re successful, tariffs would be a melting ice cube, in a way, because you’re taking in the revenues as the manufacturing facilities are built in the U.S., and there should be some level of symmetry between the taxes we begin taking in with the new industry from the payroll taxes as the tariffs decline.”

He said the White House has heard from around 70 countries interested in initiating talks. But China has taken a different tack, pledging to “fight to the end” and implementing a 34% tariff on U.S. goods.

In response, President Donald Trump has threatened an additional 50% tariff on Chinese imports if Beijing doesn’t withdraw its measure. In 2024, the U.S. ran a nearly $300 billion trade deficit with China, roughly one-third of America’s total trade imbalance.

Bessent emphasized that the administration’s tariff strategy extends beyond just adjusting tax rates—it also targets hidden trade barriers like currency manipulation and Europe’s value-added tax, which the White House argues distort fair competition.

“Everything is on the table,” Bessent said. “The academic literature shows that it’s actually the nontariff barriers which are harder, both harder to quantify and... they’re more insidious because they’re hidden, they’re obfuscated.”