Treasury Secretary Scott Bessent said on Monday that the de-escalation of the trade war between China and the US — as both countries agreed to lower their tariffs over the weekend — is part of a "strategic decoupling" of the US and China.
"Neither side wants a generalized decoupling from China,” Bessent said in an interview with CNBC’s “Squawk Box.” “But what we do want is a decoupling for strategic necessities, which we were unable to obtain during Covid and we realized that efficient supply chains were not resilient supply chains."
During the 2020 pandemic, supply chains around the globe were exposed to new challenges, which strained the ability of suppliers to import goods from China as well as other countries. The shock also exposed vulnerabilities in supply chains to the US.
As the Trump administration has been implementing its tariff plans, some of the industries that have been focused on include steel as well as semiconductors, both of which Bessent touched on in the interview as industries needing to be reshored in the US.
“We are going to create our own steel. [Tariffs] protect our steel industry. They work on critical medicines, on semiconductors,” Bessent added. “We are doing that, and the reciprocal tariffs have nothing to do with the specific-industry tariffs.” Both products are also essential for goods and services related to military defense, AI technology, and automobiles.
Over the weekend during Bessent's meeting with China's Vice Premier of the State Council, He Lifeng, led to a deal where for the next 90 days, the US will drop its 145 percent tariffs down to just 30 percent, and China will drop its 125 tariffs down to 10 percent on US goods.
In comments he made to reporters, Bessent said that he believes he will be meeting with Lifeng over the next few weeks to iron out more details for the trade negotiations. The 90-day deal for the tariff de-escalation goes into effect on May 14.
