US not yet engaged in trade talks with China: Treasury chief

​​​​​​ISTANBUL

US Treasury Secretary Scott Bessent said Tuesday that Washington has not commenced trade negotiations with China, one of its 18 most significant trading partners.

Bessent addressed concerns on the persistent trade imbalance and Beijing's trade practices as he testified before the House Appropriations Subcommittee on Financial Services and General Government.

"China -- we have not engaged in negotiations as of yet," Bessent told lawmakers. He acknowledged the approximately $300 billion trade deficit with China, attributing it partly to what he described as unfair practices.

Bessent cited China's "exploitation of child/slave-like labor and theft of intellectual property" as factors creating an uneven playing field.

While talks with Beijing are on hold, Bessent said negotiations with 17 major trading partners are happening. "I would be surprised if we don't have more than 80% or 90% of those wrapped up by the end of the year," he said, suggesting some deals might be announced "as early as this week."

The goals of the negotiations include substantial reductions in tariffs charged to the US, eliminating non-tariff barriers and addressing currency manipulation and subsidies, said Bessent. "The strategic uncertainty is part of negotiations."

Bessent defended the use of tariffs. "If tariffs are so bad, why do they like them?" referring to other countries' tariffs, noting that non-tariff barriers can be "more insidious." He asserted that tariffs are "100%" a tool to protect American jobs.

When pressed by Rep. Mark Pocan about who ultimately bears the cost of tariffs, Bessent described it as "a complicated mix." Pocan asserted that it is people who pay tariffs.

IRS reforms

Bessent acknowledged a $2.5 billion proposed cut to the Internal Revenue Service in President Donald Trump's fiscal year 2026 budget, claiming the agency is "30 years behind on IT modernization" with up to $50 billion potentially wasted.

He said his agency already cut $2 billion from the IRS IT budget "without any operational disruptions" by eliminating wasteful contracts.

"Treasury aims to reduce paper processing expense to under $20 million by the end of President Trump's second term," he added, down from approximately $450 million currently spent annually.