Is there hope for dialogue between Xi and Biden? US Treasury Secretary Bessent: China bears 65% of the tariff cost, the debt ceiling bill is progressing, and the US will not default.

U.S. Treasury Secretary Scott Bessent emphasized during an interview this morning on June 3 that the U.S. is not deliberately trying to escalate competition with China, but is taking steps to reduce risks related to China's actions, such as "holding back raw material exports," and is restructuring the Supply Chain. In response to ongoing concerns about tariffs driving up prices, Bessent pointed out that inflation data has dropped to the lowest level in four years, with monthly wage increases reaching 8% and energy prices decreasing by 20% year-on-year. Moreover, nearly 65% of the tariff costs are absorbed by China itself, not fully passed on to the American people. Regarding the impending 50% steel tariff, debt ceiling legislation, and fiscal deficit issues, he confidently stated, "The U.S. will absolutely not default, and finances will remain stable before 2028."

Key Summary

Besant emphasized that "de-risking" is not about decoupling from China, but rather about ensuring that the United States and the global Supply Chain are no longer overly reliant on China.

The US-China trade negotiations have stalled, and Trump accuses China of violating the Geneva Agreement.

Rare earths and key materials are held by China; whether the U.S. will retaliate remains to be seen in the Biden-Xi dialogue.

US inflation data hits a four-year low, and Bessenet claims the policy is effective.

A new round of tariffs will take effect on June 4, with steel tariffs increasing to 50%, potentially affecting construction costs.

The debt limit bill will be sent to the Senate, and Besant confidently stated "there will be no default."

Beijing denies intentionally deepening US-China confrontation, hopes for dialogue between Trump and Xi.

The U.S. Secretary of Defense and several officials have recently warned that the threat from China to Taiwan is increasing, with Trump directly accusing China of violating trade agreements, raising doubts about whether the Trump administration is intentionally escalating U.S.-China competition.

In response, U.S. Treasury Secretary Bessent stated that this was not intentional, as during the pandemic, China withheld many key raw material exports, leading to a halt in the Supply Chain. He emphasized:

"We are de-risking to restructure the Supply Chain."

Regarding China's failure to release the promised rare earths and critical minerals in the Geneva Agreement, Besant stated: "It could be a systemic issue, or it could be intentional." As for whether Trump and Xi will re-engage in dialogue soon, Besant indicated that "there will be news shortly."

JPMorgan's Dimon says China is not afraid of the U.S., Bessenet: China must recognize reality.

JPMorgan CEO Jamie Dimon candidly stated at a forum this week that "China is not afraid of the United States; they have already prepared for it." Bessent countered:

"I respect Dimon, but I disagree with that. No matter how prepared China is, it still has to recognize the economic reality."

Tariffs passed on to consumer spending? Besant claims inflation has reached a four-year low, with wage growth at 8%.

The outside world is still concerned about whether tariffs will be passed on to consumer goods. Besant stated that the government established the "Consumer Price Commission" back in March to track inflation indicators, and the current results are optimistic:

The inflation index hits a 4-year low.

The salary increased by 8% year-on-year last month.

Food prices have dropped, and egg prices have significantly decreased.

Energy prices decreased by 20% year-on-year.

According to data from Finance M Square, the US CPI index has reached a four-year low, refuting the claim that tariffs are passed on to consumers, stating that Chinese manufacturers absorb 65% of the tariff costs.

Besant further cited a report from the South China Morning Post, pointing out that 65% of the tariffs are actually absorbed by Chinese suppliers, refuting the claim that American companies are passing costs onto consumers.

As for retailers like Walmart (Walmart) complaining that tariffs have driven gross margins below 3%, leaving almost no profit. Besant stated:

"Corporate reports usually report the worst-case scenario to avoid being sued if something goes wrong."

(Trump slams Walmart "swallow the tariffs!" Opposes price increases passed on to consumers)

Will steel tariffs doubling affect the construction industry? Besant plays Tai Chi: helping the industry to be reborn.

Trump announced that starting from June 4, the tariffs on steel and aluminum will be raised to 50%, which may impact the construction industry.

But Besant did not talk about the data aspect, but emphasized that this would greatly boost the American steel industry. He also pointed out that he had just visited a steel mill in Pittsburgh with Trump, and the workers' morale was high.

The debt limit bill is about to enter the Senate, and Bessent said there will be no default.

Regarding the large-scale tax reform and debt ceiling increase bill currently being advanced by the U.S. Congress, there are concerns about when the bill will be passed at the latest and whether there will be any issues.

Besant emphasized:

"The United States will never default, the government will not renege on its debts, and we are discussing everything that needs to be discussed and are taking action."

Refuting Dimon's debt collapse claims, Bessent: Gradually reduce the deficit, save money through tariffs and drug prices.

Regarding JPMorgan CEO Dimon's warning that the bond market could collapse, Bessenet countered: "He has predicted a collapse in the past, but it has never happened." He added:

Trump's drug pricing plan is expected to save 1 trillion dollars.

Tariff revenues could bring in an additional 2 trillion dollars.

The goal of the administration is to reduce the deficit before 2028, ensuring the fiscal health of the United States.

(Please reach an agreement on the 90-day tariff suspension among all countries! US Treasury Secretary Bessent: Have communicated with Walmart, no need to worry about Moody's credit rating)

This article discusses the possibility of dialogue between Xi and Trump. US Treasury Secretary Bessent: China bears 65% of tariff costs, the debt ceiling bill is progressing, and the US will never default. First appeared in Chain News ABMedia.