Tariffs, Iran and bond turmoil to put U.S. Treasury Secretary Bessent’s G20 diplomacy skills to the test
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- Bessent hosts G20 finance ministers and central bank governors in Asheville, NC on Monday and Tuesday to shrink trade imbalances, boost growth, and sever business ties to Iran, after the U.S. shunned the G20 process last year in South Africa.
- Bessent has warned of secondary U.S. sanctions for countries buying Iranian oil, and on Friday imposed curbs on an Egypt-based bank over Iran-linked transactions through its UAE branches; the Strait of Hormuz remains closed, sapping growth from nearly all G20 economies.
- Trump's tariff regime was partially struck down by the Supreme Court in February; 60 economies were hit in July with 10-12.5% tariffs over alleged lax forced-labour enforcement, and 16 top trading partners — more than half G20 members — face additional levies under a separate industrial-capacity probe.
- U.S. public debt crossed $40 trillion on Aug. 19, and 30-year yields hit 19-year highs this month; Bessent surprised markets by doubling scheduled Treasury buybacks to $4 billion per operation, drawing criticism from former mentor Stanley Druckenmiller.
- China has shown little interest in rebalancing away from exports, with the IMF estimating the yuan is undervalued by 21% and Chinese exports rising 23.9% year-on-year in July — a flood European officials say is threatening their industries.
- The G20 'has a hard time agreeing on any collective action' and largely ignores geopolitical tensions, with its last major coordinated move being the $5 trillion COVID stimulus in 2020.
Why it matters: Bessent is asking countries already squeezed by an Iran-driven energy shock and a U.S. tariff regime they didn't sign off on to back tighter Iran sanctions and accept Washington's growth agenda — a tough sell when 30-year yields just hit 19-year highs and public debt blew past $40 trillion. The market already pushed back once: Bessent's surprise doubling of long-bond buybacks drew a rare rebuke from his former mentor Druckenmiller.
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