The United States is urging G20 nations to take coordinated steps to reduce global trade and fiscal imbalances amid renewed volatility in bond markets and rising inflation concerns. The call comes as government bond yields climbed sharply in several major economies, reflecting investor unease over energy-driven inflation, potential monetary tightening, and deteriorating fiscal conditions.
On Tuesday, Japan’s 10-year government bond yield rose to 3 percent for the first time since 1996, marking a further escalation in global market tensions. Similar increases in bond yields were observed across the United States, eurozone, Germany, and the United Kingdom. In Britain, yields climbed 10 basis points following the return from a public holiday, fueled partly by fresh concerns over renewed attacks in the Middle East.
Ahead of the G20 meeting, U.S. Treasury Secretary Scott Bessent told Reuters that Washington would push for a re-examination of trade relations with China, including the consideration of higher barriers on Chinese goods. The U.S. is seeking to pressure Beijing to shift its economic model from an export-driven approach toward boosting domestic consumption. China’s extensive export activities, particularly in electric vehicles and semiconductors, have increased tensions with trading partners, especially after the imposition of significant U.S. tariffs and bans on selected Chinese products. Notably, China’s exports grew 23.9 percent year-over-year in July, intensifying calls within the European Union for stricter import restrictions.
Despite these pressures, China has shown limited willingness to alter its industrial policies or address longstanding demands to reduce subsidies. Its currency, the yuan, remains widely regarded as undervalued, complicating efforts to achieve more balanced trade dynamics. The U.S. itself has yet to present a comprehensive plan to tackle its large fiscal deficits, which economists identify as a key factor contributing to its annual global trade deficit that exceeds $1 trillion.
European Economy Commissioner Valdis Dombrovskis acknowledged China’s significant role in global economic imbalances but emphasized that actions from the United States and European Union are also necessary. He summarized the assessment by stating that China should increase domestic spending, the U.S. should reduce its expenditures, and the EU should boost investments. Dombrovskis stressed that addressing these imbalances collectively would enhance the effectiveness of global policy responses, pointing specifically to the need for China’s engagement in the process.
As the G20 convenes, it remains uncertain whether members will agree on a joint strategy to mitigate trade tensions and fiscal disparities, given divergent economic priorities and approaches among the major powers.