Chinese Tech 'Piggybacking' From US, Says Treasury Secretary Bessent

A day after Nvidia Corp. and Advances Micro Devices Inc. agreed to pay 15% of their revenues from Chinese AI chip sales to the US government, Treasury Secretary Scott Bessent said the move was necessary as Chinese technology companies have been “piggybacking” on American innovation.

In an interview with Bloomberg TV, Bessent said the deal devised by US President Donald Trump ensures that American taxpayers benefit from Chinese purchases of advanced AI chips. He further added that the revenue from the arrangement will be used for paying down the national debt.

While Bessent stated that the US could hold discussions with Beijing over the use of Nvidia chips, he thinks China will ultimately bear the costs of the tariffs.

The comments come as Trump extended the pause on tariffs on Chinese goods for another 90 days into early November.

Discussing markets, the Treasury Secretary raised concerns over a widening gap between “Main Street” and “Wall Street,” coining the phrase “parallel prosperity” to highlight how financial markets and everyday economic realities are not always aligned.

He said margins are returning to pre-COVID norms but stressed that high interest rates remain “constrictive.” Bessent argued that the Federal Reserve should have begun rate cuts in June or July, and now could start a series of reductions, potentially beginning with a 50-basis-point move in September.

“There's a very good chance of a 50 basis point rate cut,” Bessent said in the interview. “We could go into a series of rate cuts here, starting with a 50 basis point rate cut in September.”

He sees rates needing to fall by 150 to 175 basis points to support the economy.

Bessent also commented on future Federal Reserve leadership, noting that President Trump is keeping an “open mind” on the next chair, with a list of 10–11 potential candidates under consideration. He also acknowledged that replacing the Fed chair alongside the recent appointment of Anthony Antoni to lead the Bureau of Labor Statistics — after dismissing his predecessor — has raised questions about political influence over economic data and policy.

However, Bessent argued that stable 10-year Treasury yields show markets retain confidence in both the Treasury and the Fed, suggesting investors are not overly concerned about political appointments or data credibility.

He also floated the possibility of more secondary measures against Russia and 200% secondary sanctions on China during a recent G-7 meeting. This comes amid tariff tensions with Russia in order to end the war with Ukraine.

The US has also penalised India for its purchase of oil from Russia.

On the broader economic outlook, Bessent said the US is returning to “normal, pre-COVID margins” and called for a substantial easing of Federal Reserve interest rates, arguing current levels are “constrictive.”