US Treasury Secretary Scott Bessent faces a major diplomatic test this week as he seeks to revamp the G20 process under US leadership in Asheville, North Carolina. According to reports from Business Standard, after shunning the Group of 20 process last year in South Africa, Bessent is now seeking to push the Trump administration's worldview through finance leaders from major economies. As per Associated Press, Bessent opened the meetings on Monday saying he wants to focus on ways to grow the global economy and rein in mounting debt. The meeting of finance ministers and central bank governors comes at a time of massive uncertainty over the Trump administration's next tariff moves and festering trade war with close ally Canada. As per Atlantic Council's Josh Lipsky, Bessent will want to put Iran front and center and talk about tightening sanctions, while many countries around the G20 table will want to talk about tariffs instead.
The unresolved Iran conflict has created significant economic disruption, with the Strait of Hormuz remaining closed and sapping growth from nearly all G20 economies. As reported by Business Standard, Bessent has warned that countries face secondary US sanctions if they continue to buy Iranian oil or facilitate other transactions with Tehran. According to Associated Press, Bessent told the AP that he plans to turn up pressure on Iran by sanctioning another bank, part of what he is calling 'Operation Economic Outcast.' He said the administration is prepared to exact 'financial violence if we have to.' Asked by reporters Monday how long it would take for the Iranian economy to collapse, Bessent said: 'I think it could be within weeks or months -- and the economy doesn't have to collapse, we just have to have the regime come to their senses.' The Iran war has contributed to high energy and commodity prices, adding to the economic pressures facing global finance leaders. According to Atlantic Council's Josh Lipsky, 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.
The Trump administration has rebuilt tariffs under different legal authorities after the Supreme Court struck down President Trump's broad global tariffs in February. According to Business Standard, all G20 countries and the European Union were among 60 economies hit in July with 10% or 12.5% US tariffs for allegedly lax enforcement of forced labor bans. Sixteen top US trading partners, more than half G20 members, are in line for additional tariffs to counter alleged excess industrial capacity under a separate trade probe. European officials are particularly concerned about growing Chinese exports threatening their industries, with China's total exports rising 23.9% year-on-year in July. As reported by Associated Press, a particular challenge is China, which is the largest buyer of Iranian oil. Bessent told the AP that 'all options are on the table' in terms of sanctioning Beijing for its continued purchases, but he rejected the idea that the administration was reluctant to confront China, calling it 'a completely false narrative.'
US debt market pressures have intensified with total US public debt crossing the $40 trillion mark on August 19 after doubling since 2017. As reported by Business Standard, yields on 30-year debt reached their highest levels in 19 years this month, prompting Bessent to announce a doubling of scheduled buybacks of longer-dated Treasuries to $4 billion per operation. The move has drawn criticism from former Wall Street mentor Stanley Druckenmiller and raised concerns among central bankers about potential interventionist Treasury moves in the debt market. According to Associated Press, Bessent told the AP that 'the world has this mountain of debt, and we do have to grow our way out of it.' He added that they want to discuss global imbalances, banking regulations, some sovereign debt restructuring for developing countries during the G20 discussions.
The diverse G20 forum, including China and Russia, has historically struggled to agree on collective action while largely ignoring geopolitical tensions. According to Business Standard, former Treasury official Mark Sobel noted that G20 ministers won't buy into soothing words, as their economies are being adversely hit by Trump's war on Iran which their countries don't support. As per Associated Press, France's finance minister, Roland Lescure, told reporters he hopes there will be a global statement from the G20 on an agreed-upon path for economic growth worldwide. However, Daniel Fried, a former assistant secretary of state for European affairs, warned that 'the US may find it difficult to rally its usual friends and allies' under current circumstances. He said if Bessent and other administration officials want international support, they will need to 'take greater care in consulting with allies and partners than the US has shown in recent months.' The G20 meetings are taking place in Asheville, which was devastated by Hurricane Helene in September 2024, with the natural disaster killing more than 250 people and causing nearly $80 billion in damage from Florida to the Carolinas.
