Bessent faces G20 test amid tariffs and war

By Sohail Khan 30 August 2026, 3:36 pm

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Business News›News›International›Business›US Treasury's Bessent faces G20 diplomacy test amid tariffs, Iran war, bond turmoil

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US Treasury's Bessent faces G20 diplomacy test amid tariffs, Iran war, bond turmoil
Synopsis

US Treasury Secretary Scott Bessent will push G20 economies to reduce trade imbalances, boost growth and cut ties with Iran at meetings in North Carolina. The talks come amid tariff tensions, high energy prices and growing concerns over US debt, which recently crossed $40 trillion.

FILE PHOTO: U.S. Treasury Secretary Scott Bessent speaks outlines further sanctions against Iran, at the Treasury Department in Washington — U.S. Treasury Secretary Scott Bessent

ASHEVILLE, North Carolina, – U.S. Treasury Secretary Scott Bessent faces a major test of his economic diplomacy skills this week as he presses finance leaders from the G20 major economies to shrink global trade imbalances, boost growth and sever business ties to Iran, while trying to calm worries about rising U.S. debt and bond yields.

After shunning the Group of 20 process last year in South Africa, Bessent is seeking to revamp it under U.S. leadership to push the Trump administration's worldview in the Blue Ridge Mountains city of Asheville, North Carolina.

The meeting of finance ministers and central bank governors on Monday and Tuesday comes at a time of massive uncertainty over the Trump administration's next tariff moves, its festering trade war with close ally Canada, and ‌high energy and commodity prices due to ⁠the Iran ⁠war.

The unresolved conflict has kept the Strait of Hormuz closed, sapping growth from nearly all G20 economies. And Bessent has warned that countries face secondary U.S. sanctions if they continue to buy Iranian oil or facilitate other transactions with Tehran. On Friday he imposed curbs on a bank based in G20 member Egypt over links to Iran through its branches in the United Arab Emirates.

The combination of pressures adds up to potentially more discord in the widely diverse forum that includes China and Russia and has a hard time agreeing on any collective action while largely ignoring geopolitical tensions such as the war in Ukraine.

"Secretary Bessent will want to put Iran front and center and talk about tightening sanctions on Iran, and many countries around the G20 table will want to talk about anything else," said Josh Lipsky, international economics chair at the Atlantic Council. "They'll want to talk about tariffs."

After the Supreme Court struck down President Donald Trump's broad global tariffs in February under a national emergencies law, his administration has been rebuilding the levies under different legal authorities.

All of the G20 countries and the European Union were among 60 economies hit in July with ⁠10% or ‌12.5% U.S. tariffs for allegedly lax enforcement of forced labor bans. Sixteen top U.S. trading partners — more than half of them G20 members — are in line for more tariffs to counteract alleged excess industrial capacity under a separate trade probe.

CUTTING IMBALANCES

The tariffs are central to the Trump administration's effort to reduce global trade imbalances, which a senior Treasury official said were the result of distortive government economic policies "that ⁠prevent fair competition" and that would be a major discussion topic at the Asheville meetings.

European officials are keen to discuss the growing flood of Chinese exports that is threatening their industries, including autos, a European official due to attend the meetings said.

With chronically weak domestic demand, China has doubled down on exports of electric vehicles, semiconductors and other goods, and its total exports rose 23.9% in July year-on-year. With high U.S. tariffs and an outright ban on Chinese vehicles, China's exports have flooded into Europe, prompting growing calls in the EU for tougher curbs on Chinese imports.

But G20 member China has shown little interest in longstanding calls for it to reduce industrial subsidies and rebalance its economy away from exports to internal consumer demand, while the International Monetary Fund estimates that China's yuan is undervalued by 21%.

But economists say that the U.S. has shown little interest in the other side of the equation: a major reduction in fiscal deficits that would help quell demand for imports. Total U.S. public debt crossed the $40 trillion mark on August 19 after doubling since 2017 during Trump's two terms and the intervening presidency of Joe Biden, and markets are growing edgy about the future U.S. debt trajectory.

Yields on 30-year ‌debt reached their highest levels in 19 years this month, but Bessent surprised markets by announcing a doubling of scheduled buybacks of longer-dated Treasuries to $4 billion per operation, which cooled yields briefly.

The move drew criticism from Bessent's former Wall Street mentor, Stanley Druckenmiller, and has raised concerns among central bankers the Treasury may make more interventionist moves in a massive market known for its "regular and predictable" debt issuance.

Asked how Bessent would discuss the debt market concerns with G20 counterparts, a ⁠senior U.S. Treasury official said that the long-bond yields had "risen above what we consider fair value," and the Treasury was committed to bringing yields lower.

Bessent's corrective market tactics also have extended to G20 currencies, with an August 1 joint U.S. intervention with Japan to support the yen and October 2025 purchases of Argentine pesos.

G20 ministers attending the meeting "won't buy into soothing words," said Mark Sobel, a former U.S. Treasury official who negotiated G20 communiques during both Republican and Democratic administrations.

"Further, their economies are being adversely hit by Trump's war on Iran, which their countries don't support," said Sobel, now U.S. chair of the OMFIF monetary policy think tank. "No amount of US diplomacy can change those realities."

The U.S. push for more global growth, which the Treasury official said was anchored by reduced regulation, more energy production and private sector innovation, is part of an effort to return the G20 to its roots after focusing on issues promoted by host countries in recent years.

South Africa pressed G20 countries to address the climate crisis last year, while Brazil in 2024 pushed proposals to raise taxes on the wealthy.

The G20 got its start as a leaders-level forum during the 2008 global financial crisis to unleash measures to end the deepest recession since the 1930s. Its last major collective action came during the COVID-19 crisis in 2020, when member countries agreed to inject another $5 trillion into the global economy to combat job and income losses.

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