US Treasury's Bessent urges Asian Development Bank to move towards ending China loans - Reuters

US Treasury's Bessent urges Asian Development Bank to move towards ending China loans - Reuters

WASHINGTON - In a significant move aimed at reshaping global trade dynamics, US Treasury Secretary Scott Bessent has called on the Asian Development Bank (ADB) to cease providing loans to China. This directive, issued during the recent International Monetary Fund (IMF) and World Bank annual meetings, underscores the Trump administration's ongoing efforts to de-escalate the US-China trade war and promote a more balanced trading relationship [1].

Bessent emphasized that excessively high tariffs between the US and China are unsustainable and must be reduced for trade negotiations to commence. He stressed that neither side believes the current tariff levels are tenable, describing them as equivalent to an embargo that does not benefit either economy. However, he clarified that President Donald Trump would not unilaterally cut tariffs on Chinese goods, echoing White House spokesperson Karoline Leavitt's stance on no unilateral reductions [1].

The Treasury Secretary indicated that negotiations with numerous countries are ongoing, with a deal with India being particularly close. He highlighted that the talks with India were easier due to fewer complex non-tariff trade barriers and no currency manipulation, making it a priority for reducing the US trade deficit. Bessent also mentioned ongoing negotiations with the EU, particularly addressing digital services taxes, and with Japan, which would include tariffs, non-tariff trade barriers, currency manipulation, and government subsidies [1].

Bessent's comments come amidst a backdrop of economic uncertainty caused by the ongoing trade war. The IMF has recently downgraded US growth projections due to the tariffs and their resulting retaliation, with a significant reduction in expected growth for 2025. Despite this, Bessent remains optimistic about the third quarter of this year bringing clarity on the ultimate levels of Trump's tariffs and the potential for economic growth to reach 3% through increased energy production [1].

The ADB's response to Bessent's directive remains to be seen, but his call for a cessation of Chinese loans is a clear signal of the Trump administration's desire to shift the balance of power in global trade. As negotiations continue, the financial community will closely monitor these developments for their potential impact on global economic stability and trade relations.

References:
[1] https://www.straitstimes.com/world/united-states/us-china-tariffs-both-need-to-fall-for-trade-talks-to-start-treasurys-bessent-says