U.S. Treasury Secretary Scott Bessent enters a two-day G20 finance meeting in Asheville, North Carolina, pressing counterparts to shrink trade imbalances, cut business ties to Iran and accept a doubling of U.S. Treasury buybacks meant to calm bond markets. The talks unfold against fresh U.S. tariffs, a stalled Iran war and mounting concern over the $40 trillion U.S. debt pile.
Treasury Secretary Scott Bessent this week presses finance leaders from the G20 major economies to shrink global trade imbalances, boost growth and sever business ties to Iran, while trying to calm worries about rising U.S. debt and bond yields. Bessent had shunned the G20 process last year in South Africa, but is now seeking to revamp the forum under U.S. leadership. The meeting of finance ministers and central bank governors runs Monday and Tuesday in Asheville.
Iran sanctions dominate the agenda
The unresolved Iran war has kept the Strait of Hormuz closed, sapping growth from nearly all G20 economies, and Bessent has warned that countries face secondary U.S. sanctions if they keep buying Iranian oil or facilitating other transactions with Tehran. On Friday he imposed curbs on a bank based in G20 member Egypt over links to Iran through its branches in the United Arab Emirates.
According to Atlantic Council international economics chair Josh Lipsky: "Secretary Bessent will want to put Iran front and center", while many countries at the table will want to talk about tariffs instead. That split points to a forum that, as the diverse group including China and Russia, has a hard time agreeing on collective action.
Tariffs and trade imbalances resurface
After the Supreme Court struck down Trump's broad global tariffs in February under a national emergencies law, the administration has been rebuilding the levies under different legal authorities. All G20 countries and the EU were among 60 economies hit in July with 10% or 12.5% U.S. tariffs for allegedly lax enforcement of forced labor bans. Separately, 16 top U.S. trading partners are in line for more tariffs under an industrial-capacity probe.
European officials, meanwhile, want to discuss the flood of Chinese exports threatening their industries. China's total exports rose 23.9% in July year-on-year. The IMF estimates its yuan is undervalued by 21%, even as economists say the U.S. has shown little interest in a fiscal deficit reduction that would help quell its own import demand.
Bond market tensions weigh on talks
Total U.S. public debt crossed the $40 trillion mark on August 19 after doubling since 2017. Yields on 30-year debt reached their highest levels in 19 years this month. Bessent surprised markets by doubling scheduled buybacks of longer-dated Treasuries to $4 billion per operation, which cooled yields briefly but drew criticism from his former mentor, Stanley Druckenmiller.
A senior U.S. Treasury official said long-bond yields had risen above what the Treasury considers fair value, and that it remains committed to bringing them lower. Some central bankers, however, worry the moves may signal a more interventionist approach in a market known for regular and predictable debt issuance.
Source: Investing.com
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