US Treasury Secretary Scott Bessent is pushing for a coordinated approach with the EU, Canada, and other G7 allies to confront China’s massive trade surplus, signaling that Washington views bilateral tariffs alone as insufficient to reshape global trade dynamics.
The numbers behind the push
China’s goods trade surplus hit a record $1.2 trillion in 2025, a figure Bessent has repeatedly characterized as unsustainable. To put that in perspective, that’s roughly the entire GDP of Mexico, generated purely from the gap between what China sells to the world and what it buys back.
US tariffs implemented after President Trump’s return to office in 2025 have made a dent in the bilateral picture. The trade deficit between the US and China reportedly fell to $73.9 billion in the first half of 2026, roughly one-third lower than the same period a year earlier.
But Bessent has been candid about a frustrating side effect. Chinese exports aren’t disappearing. They’re being rerouted to other markets, flooding allies with the same goods that US tariffs were designed to curtail.
Building the coalition, one summit at a time
As early as January 2026, G7 discussions centered on critical minerals supply chains, with a particular focus on reducing China’s dominant position in rare earths. Those conversations expanded to include Australia and India, two countries with significant mineral reserves that could serve as alternative suppliers.
By May 2026, G7 leaders were leveraging IMF data to quantify the impact of China’s export practices on global trade. The message was consistent: China’s non-market policies, including state subsidies and below-cost pricing, were distorting competition in ways that hurt manufacturers across developed economies.
The September 2026 G20 finance ministers’ meetings in Asheville, North Carolina, represented the most ambitious attempt yet to formalize this consensus. Nineteen of the G20’s members supported language calling for the elimination of non-market policies that contribute to trade imbalances.
China objected. Beijing blocked certain language in the chair’s statement, preventing a full joint communique.
The critical minerals dimension
China currently dominates global processing of rare earth elements, controlling a share of the supply chain that gives Beijing significant leverage over industries far beyond traditional manufacturing. The G7 coordination on minerals diversification represents an attempt to build alternative supply chains that reduce this dependency. Australia’s abundant lithium reserves, India’s rare earth deposits, and Canada’s mining sector are all potential beneficiaries of a deliberate effort to redistribute sourcing away from China.
What this means for markets and trade policy
The $73.9 billion bilateral deficit reduction shows that tariffs work on a bilateral basis. The $1.2 trillion global surplus shows that bilateral action alone isn’t enough. If G7 nations move in concert to impose trade barriers or countervailing duties on Chinese goods, the pricing dynamics for everything from steel to solar panels could shift meaningfully. Without that coordination, Bessent’s own warnings suggest Chinese exports will continue finding new markets as existing doors close.