Bessent Dismisses China Investing in US for a Trade Pact

Bloomberg

2 days ago

00:00
What is our understanding at a time, of course, when negotiations between the US and China continue? We have that 90 day extension in terms of what this agreement could look like if investments in the US and China are not part of that. There is so many touchpoints, there are so many touch points, as you say, when it comes to that relationship. And if you can't talk about actual investment, which has been a consistent concern, not just with China, but you mentioned Japan as well, the Nippon Steel Deal has really brought into question how much foreign direct investment you actually want at the end of the day, which is ironic given it's such a key pillar of Donald Trump's policy, bringing in that foreign investment to kind of offset some of the expenditures when it comes to things that the government would need to spend. In terms of the country, it's one of the components of U.S. GDP. But the other key touchpoints are things like where it's IP, it's technology, but it's also a manufacturing and supply chain story that extends not into China, just into trying to Vietnam, the Philippines, Malaysia, etc. that ultimately comes back to the end consumer. And the point that Scott Bessant is trying to make here is that there's already so much interdependence between the two. So do we need to include foreign direct investment on top of that? Anecdotally, for example, when the Chinese invested in the Empire State Building, just as a hypothetical, that is where there was a lot of concern about the fact that some of these massive American projects are foreign owned. And that was something that domestically caused quite a bit of concern. This was years ago, of course, but that kind of sentiment that's starting to come back up more broadly in terms of that, in terms of the revenue increase coming through from tariffs, we get away any clearer to a point where that is starting to offset concerns about the US deficit. Is it is it making a mark as we see those revenues tick up year on year pretty, pretty substantially? They're enormous. I mean, the last three months just from the tariff collected since Liberation Day, even as these kind of negotiations are ongoing, are a pretty decent chunk of change. You're talking about billions of dollars being collected by the IRS, but billions it doesn't solve $1,000,000,000,000 problem or multi-trillion dollar problem. And that's really where the concern is. His argument or Donald Trump's argument is simply that the math will add up, that the tariff revenue plus the tax cuts will somehow offset the deficit. But we've talked to economists and market participants throughout programming who've suddenly said, well, the math doesn't add up because you're not actually taking into account some of the other pieces as well. That being said, is the interest rate payments that are ultimately causing the kind of snowball effect in the deficit. And that's where those kind of essentially dose cuts were pointed at to kind of get rid of the underlying thing that is ultimately spending the money and then be able to bring the deficit down. We are making a dent, but it's a tiny debt.