G20 faces fresh tensions as Bessent pushes US agenda

US Treasury Secretary Scott Bessent is facing a critical test of his economic diplomacy this week as he urges finance leaders from the G20 major economies to reduce global trade imbalances, spur growth, and sever business ties with Iran. Bessent is seeking to revamp the G20 process under US leadership, to promote the Trump administration's worldview, during a meeting in Asheville, North Carolina.

The finance ministers and central bank governors meeting comes amid uncertainty over the Trump administration's next tariff moves, its ongoing trade war with Canada, and high energy and commodity prices due to the Iran conflict. The conflict has kept the Strait of Hormuz closed, affecting growth across all G20 economies. Bessent has threatened secondary U.S. sanctions on countries that continue to buy Iranian oil or engage in other transactions with Tehran.

He recently imposed restrictions on an Egyptian bank with links to Iran through its branches in the UAE. This mix of pressures could lead to more discord in the diverse G20 forum, which includes China and Russia, and often avoids discussing geopolitical tensions like the war in Ukraine. "Bessent will want to focus on Iran and sanctions, while many countries will want to discuss tariffs," said Josh Lipsky, international economics chair at the Atlantic Council.

The US has been rebuilding tariffs under different legal authorities since the Supreme Court struck down Trump's global tariffs in February. These tariffs are aimed at reducing global trade imbalances, which the Treasury claims are caused by governments' economic policies that hinder fair competition. European officials are keen to discuss China's exports, which threaten their industries, including autos.

China has responded to high US tariffs by flooding Europe with exports of electric vehicles, semiconductors, and other goods. However, China shows little interest in reducing industrial subsidies and rebalancing its economy away from exports. US debt has surpassed $40 trillion, causing markets to grow wary of the future trajectory.

Bessent has attempted to cool yields by doubling scheduled buybacks of longer-dated Treasuries to $4 billion per operation, but this has drawn criticism and raised concerns about more interventionist moves. G20 ministers attending the meeting are expected to reject soothing words from the US and acknowledge the adverse impact of Trump's war on Iran.