'From Bad To Terrible': Treasury Secretary Slams Beijing's Retaliatory Tariffs As Trump Trade Agenda Wipes Trillions

U.S. Treasury Secretary Scott Bessent appeared on Fox Business Wednesday to praise President Donald Trump's aggressive trade stance and decry China's latest move to hike tariffs on U.S. goods to 84%.

What Happened: "They have the most imbalanced economy in the history of the modern world," Bessent said, referring to Beijing. "They can raise their tariffs, but so what? Their exports to the U.S. are five times ours to them. This escalation is a loser for them."

Bessent warns that China's economy is already in a deep structural slowdown, weighed down by a real estate crisis and weak consumer demand.

Meanwhile, Trump's tariff-induced sell-off has wiped out $9 trillion in equity capital over six weeks. It rivals the $9 trillion lost during the COVID crash in 2020 over one month. It also surpasses the $8 trillion erased during the 12 months following the Lehman Brothers collapse in 2008. Also, U.S. consumer confidence is at its lowest level since late 2022.

But Bessent insists that the trade war is compounding China's economic problems. Any attempt by Beijing to manipulate its currency to offset tariffs would damage its own economy, he argues.

"They're going from bad to terrible," Bessent said. "If China tries to devalue their way out of this, then that's a tax on the rest of the world."

Bessent added that such a move would likely trigger a global chain reaction, forcing other countries like Japan, South Korea, and the European Union to raise tariffs in response to a weaker yuan. He claims that would further isolate China economically.

"Everyone is coming to the table. Basically, China is surrounded," Bessent said, referring to growing trade cooperation between the U.S. and key Asian allies like Vietnam, Japan and South Korea.

Bessent also tied the tariff push to national security, pointing to China's role in the fentanyl epidemic that continues to ravage the U.S. population. He said that addressing the flow of precursor chemicals from China should be a top priority in any negotiations.

"Distributing drugs in China is punishable by death. Why don't they apply the same standard to the people who are exporting these chemicals to the U.S.?" Bessent asked.

He said the original trigger for Trump's tariff escalation was China's failure to stop fentanyl exports. This, he says, remains a valid reason to maintain pressure.

Why It Matters: Bessent says China's retaliatory tariff action in response to the U.S. imposing a 104% tariff on Chinese goods will hurt its own fragile economy far more than it impacts the U.S.

Chinese officials disagree. "As the world's second-largest economy and the second-largest consumer market, China will only continue to open its doors wider, regardless of the changing international landscape," China's Foreign Ministry said in a statement on April 5.

Markets remain in turmoil, with the SPDR S&P 500 ETF Trust SPY nearing bear market territory. Pressure is now extending to Treasuries as well.

The iShares 20+ Year Treasury Bond ETF TLT plunging 6.5% over four sessions. But Bessent played down fears of a systemic crisis, characterizing the selloff in Treasuries as a normal market shakeout.

"This is an uncomfortable but normal deleveraging. Some large leverage players are experiencing losses and being forced to reduce exposure," Bessent said.

As leverage comes down, the bond market will stabilize, he said. Bank deregulation will also create new, more durable demand for Treasuries, he added.

What’s Next: Bessent says the White House is moving to pass a tax extension package and roll out further deregulation measures aimed at reigniting private sector investment.

He called the negotiations "substantial" and said Trump's direct involvement is accelerating momentum on Capitol Hill. Deregulation, he noted, takes time to show results, but will be "powerful" once implemented.

"We are going to releverage the private sector through smart, safe and sound bank deregulation," Bessent said. "Part of that includes changing the Supplementary Leverage Ratio so banks can buy more Treasuries without a big capital charge."

Bessent said Trump's economic plan is about reversing trends from the previous administration.

It’s worth noting that, under the Biden administration, the U.S. unemployment rate was 3.4% at one point. The last time it was that low was in 1969.

"We're reprivatizing the economy," Bessent said. “As we get the budget under control and inflation under control, energy prices will come down, and then the private sector will have room to grow.”

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