Treasury Secretary Scott Bessent said Wednesday the U.S. is moving toward trade agreements with key allies that will form the basis for a united economic front against China, while dismissing fears of a financial crisis as “nothing systemic.”
Speaking at the American Bankers Association meeting in Washington, Bessent laid out the Trump administration’s strategy to pressure Beijing through coordinated economic diplomacy.
“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.”
He warned Europe not to break ranks or retaliate against tariffs from the U.S.
“That would be cutting your own throat,” Bessent said, singling out Spanish officials who recently voiced interest in closer economic ties to China.
The Fantasia Economy
Bessent likened China’s model to a runaway cartoon. “They keep producing and producing, and dumping and dumping,” he said, comparing China’s export-driven economy to the spellbound brooms in Disney’s Fantasia, endlessly flooding the global market.
China, Bessent emphasized, is the only major country escalating following Trump’s new round of reciprocal tariffs. While others are seeking negotiations—including Japan, South Korea, India, and Vietnam—Beijing has instead responded with currency moves and retaliatory levies.
Panic in the Bond Market? “Normal Deleveraging,” Says Bessent
Earlier in the day on Fox Business, Bessent dismissed recent volatility in Treasury markets, where yields spiked sharply overnight, as a cyclical cleanout of excessive leverage.
“In the fixed-income markets, there are some very large leveraged players who are experiencing losses,” he said. “They are having to deleverage… I believe there is nothing systemic about this.”
He said risk managers are already reining in exposure: “As leverage comes down, and risk managers tap people on the shoulder telling them to bring the books down—then the market will calm down.”
The 10-year Treasury yield surged past 4.5 percent in overnight trading before pulling back slightly, prompting dire warnings from critics of Trump’s trade agenda. Former Treasury Secretary Larry Summers claimed a “serious financial crisis” may be underway, “wholly induced” by Trump’s tariffs.
Bessent dismissed such warnings.
“There is a little uncertainty,” he said at the ABA event, but “we are in pretty good shape.” Most CEOs he speaks with, he said, continue to describe the economy as “very solid.”
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