US Treasury Official Signals Extending Trade Truce to Pave Way for Bigger Deal

U.S. Treasury Secretary Scott Bessent revealed on Monday that the United States is open to extending the U.S.-China trade truce, which is set to expire on November 10, while also assessing the possibility of negotiating a larger-scale trade agreement on that foundation. This stance comes on the eve of a high-level meeting between U.S. President Joe Biden and Chinese President Xi Jinping, adding significant variables to bilateral interactions in the trade and economic spheres.

Since 2018, the United States has imposed high tariffs on Chinese imports, with the cumulative value of affected goods exceeding $300 billion, leading to an escalation in trade friction between the two nations. Although the "Phase One" trade agreement signed in 2020 yielded some progress in agricultural and manufacturing purchases, many structural issues remain unresolved, particularly regarding key issues such as technology transfer, intellectual property rights, and market access. To prevent the tariff dispute from escalating further, both sides reached a temporary trade truce late last year, agreeing to suspend new tariff measures for one year and continue dialogues on trade disputes. This truce period has served as a buffer for the economic relationship between the two countries and holds critical significance for the stability of global supply chains and financial markets.

Domestically, the trajectory of U.S. trade policy is subject to multiple pressures. Since the onset of the pandemic, persistent high inflation and supply chain disruptions have heightened the sensitivity of the manufacturing and agricultural sectors to tariffs. Meanwhile, the approach of the 2024 presidential election has made political parties more cautious on trade issues, aiming to avoid exacerbating voter sentiment through intensified trade friction. As the core agency for government fiscal and external economic policy, the Treasury Department's open attitude toward extending the trade truce indicates that the Biden administration is seeking a relatively balanced path between meeting internal economic needs and maintaining international competitiveness.

For China, recent slowdowns in economic growth, adjustments in the real estate sector, and weak external demand have made the stability of export markets particularly important. If the trade truce is extended, it will help alleviate the tariff cost pressure on Chinese companies and provide them with time to reposition in global markets. The Chinese government has repeatedly emphasized its willingness to advance trade negotiations on a mutually beneficial basis, indicating that maintaining a predictable external trade environment is one of its policy orientations under the current economic conditions.

The "larger-scale trade agreement" mentioned by Bessent, if materialized, could cover a broader range of industrial sectors, including high technology, energy, and service trade. If such an agreement can break through existing tariff and non-tariff barriers, it will provide a positive stimulus for investment decisions by companies in both countries. It may also reshape the layout of global industrial chains, having a profound impact on supply chain security and price stability in the Asia-Pacific region. For U.S. allies, particularly Taiwan and Japan, it is crucial to closely monitor the details of the agreement's clauses to assess their positions within the regional security and economic competitive landscape.

In summary, Scott Bessent's remarks reveal that the U.S. retains flexibility in its trade policy and is willing to explore broader cooperation based on the existing truce. Whether substantive breakthroughs can be achieved during the meeting between Biden and Xi will depend on the room for compromise and political will of both sides on key issues. Regardless of the outcome, this development has already sparked widespread attention among international capital markets and policymakers, and may serve as a key indicator for the direction of the global economy in the second half of 2024. (Factual source: CNA)