Bessent Says US Will ‘De-Risk’ Not Decouple From China, Signalling Targeted Trade Controls
US Treasury Secretary Bessent announced a strategic shift away from broad economic decoupling from China toward a targeted “de-risking” approach. The policy aims to preserve mutually beneficial trade while mitigating specific national-security vulnerabilities. Key focuses will likely include critical minerals, semiconductor manufacturing (continued export controls on advanced chips), pharmaceutical supply chains, and clean-energy technologies. Bilateral trade remained large — roughly $650 billion in 2024 — underscoring deep economic interdependence. Markets reacted cautiously, with modest gains as investors assessed reduced immediate disruption risk. The administration will coordinate with Commerce, Defense and State to define criteria distinguishing “risk” from routine economic activity. International responses were mostly favorable: the EU welcomed alignment with its own de-risking stance, and Asian partners expressed relief. Chinese state media responded cautiously. Traders and corporates should expect clearer but more granular rules, higher compliance and supply-chain costs, and sector-specific restrictions that may affect tech and advanced-manufacturing supply chains. The approach seeks to balance national security concerns with economic stability; implementation details and allied coordination will determine longer-term market implications.
Neutral
The announcement reduces the immediate probability of disruptive, broad-based trade shocks that would have been bearish for global risk assets (including crypto). By preserving trade while targeting high-risk sectors (semiconductors, critical minerals, biotech), the policy lowers systemic economic disruption risk but raises sector-specific regulatory risk — especially for technology and hardware supply chains that underpin parts of crypto infrastructure (mining hardware, semiconductor supply). Markets typically respond positively to reduced tail-risk, producing near-term calm or modest gains; however, increased compliance costs and targeted export controls can pressure firms tied to hardware or chip supply, producing mixed medium-term effects. For crypto traders: expect short-term stability (neutral-to-mildly bullish sentiment) as macro tail risk eases, but monitor sector-specific developments—export control announcements, restrictions on critical minerals, or supply-chain re-shoring that could increase hardware costs or create localized volatility. Historical parallels: statements that de-escalate trade-war rhetoric (versus outright tariffs) often produce modest rallies in risk assets; conversely, targeted tech export controls (e.g., 2019–2020 chip measures) caused sectoral drawdowns. Overall, the balanced, implementation-dependent nature of de-risking supports a neutral market classification with potential short-term bullish bias but persistent idiosyncratic risks.