Trump and Scott Bessent slam China for choking markets with a 'never-ending stream of cheap exports' that’s screwing the U.S. economy

Treasury Secretary Scott Bessent raised the same concern at this week’s G20 meeting, saying 19 members agreed a flood of cheap exports was creating imbalances in the global economy. China, perhaps not surprisingly, was the lone dissenter.

“We believe that non-market-based economies pushing out a never-ending stream of cheap exports is not sustainable,” Bessent said, as reported by AP.

Despite the administration’s concerns, the reported 7.5% tariff rate appears deliberately modest.

Administration officials believe the rate is low enough to preserve a one-year trade truce between Washington and Beijing without jeopardizing a planned White House meeting between Trump and Chinese President Xi Jinping later this month, according to AP.

The proposal also appears designed to navigate around a major legal setback for Trump’s trade agenda.

In February, the Supreme Court struck down the sweeping tariffs Trump had imposed under the International Emergency Economic Powers Act, ruling the law didn’t give the president authority to levy tariffs. A federal trade court subsequently ordered the government to refund the unlawful duties to importers.

By the end of July, U.S. Customs and Border Protection had processed $100 billion of the estimated $166 billion owed to thousands of U.S. businesses, court filings showed.

For now, the administration appears to be taking a more conventional legal route in its probe of China’s industrial overcapacity. According to AP, the investigation was launched under Section 301 of the Trade Act of 1974, which gives the president broad authority to impose tariffs in response to discriminatory foreign trade practices.

Why the trade gap is proving hard to close

For all the Trump administration’s efforts to bring manufacturing back to American soil and curb the country’s reliance on foreign goods, July showed how difficult it can be to shrink a trade deficit that the president has made a core pillar of his economic agenda.

In July, the U.S. goods and services deficit surged 24.4% from the previous month to $88.6 billion, its widest since early 2025, according to the Bureau of Economic Analysis.

But what Americans are importing matters just as much as how much they are buying from overseas.

While the proposed 7.5% overcapacity tariff reportedly targets underpriced Chinese goods, much of July’s import surge came from American companies buying the technology needed to fuel the AI boom. Capital-goods imports jumped $14.4 billion as businesses ramped up purchases of computers, computer accessories and semiconductors.

The result presents something of a paradox for Trump’s trade agenda, as a large chunk of deficit-widening imports could ultimately help expand U.S. productive capacity.

China also isn’t the only source of the trade gap. The U.S. goods deficit with 13 major Asia-Pacific economies swelled to $93.8 billion in July as imports from manufacturing hubs outside China continued to climb, according to Nikkei Asia. The figures suggest tariffs on Chinese goods can redirect U.S. demand toward other manufacturing centers rather than eliminate it.