US Treasury Secretary Scott Bessent emerged from this week’s market ructions as a perhaps-unexpected lead trade negotiator, offering a potential scenario for the coming months: US deals with longstanding partners that put pressure on China.

“They’ve been good military allies, not perfect economic allies,” the former hedge fund manager said Wednesday of some of these US friends. At the end of the day, the Trump administration can probably reach an agreement with them. “Then we can approach China as a group,” he said.

The nations Bessent said he’s looking to — Japan, South Korea, Vietnam and India — happen to be neighbors of China. They are countries with which the US could work to isolate China, something that’s been called a “grand encirclement” strategy.

If this tactic sounds familiar, that’s because it is. The Obama administration’s big trade idea was using the Trans-Pacific Partnership to assemble a coalition of Pacific Rim nations that would increasingly be tied to the US, and not drift into China’s orbit. Trump abandoned the TPP shortly after first taking office in January 2017.

Chinese President Xi Jinping isn’t about to sit on the sidelines, however. It’s an unlikely coincidence that he plans to visit Vietnam next week just days after Hanoi dispatched a deputy prime minister to kick off talks with Bessent and Commerce Secretary Howard Lutnick. But the biggest obstacle for Bessent’s hopes? That may prove to be his boss.

US Treasury Secretary Scott Bessent Photographer: Chris Kleponis/CNP

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This week wasn’t the first time Bessent suggested an underlying China strategy behind deals with other countries. In February, in the context of Trump’s tariff salvoes against Canada and Mexico, he threw out the idea of a “Fortress North America.” This redoubt would allow for the trio of nations to mount a joint shield against “the flood of Chinese imports.”

His focus on China was also seen in a response to Spain’s prime minister, Pedro Sanchez, after the latter called for a European Union pivot toward China. The Treasury chief this week warned the EU against such an approach. “That would be cutting your own throat,” he argued at an American Bankers Association event.

For her part, European Commission President Ursula von der Leyen appeared to be well aware of the risks in a call this week with Xi’s top lieutenant, Premier Li Qiang. While a Chinese readout of the chat omitted mention of it, the EU flagged that there was discussion of “setting up a mechanism for tracking possible trade diversion.” As in, any flooding of Europe with Chinese goods in an effort to escape 145% US tariffs.

European Commission President Ursula von der Leyen Photographer: Neil Hall/EPA

Using trade deals against a strategic adversary is sort of Grand Strategy 101. Besides its humanitarian concerns at the time, the US after World War II implemented the Marshall Plan in part to ensure Western Europe didn’t flip Communist. Washington championed a reduction in tariff levels and increasingly opened its market — by far the world’s biggest at the time — to imports in the hope that economic development abroad would aid in the broader campaign against the Soviet Union.

While the world is a lot different now, that logic isn’t gone, as this newsletter touched on with an Axis and Allies board-game analogy a few years back. And the constructive response to Trump’s massive tariff hikes from many countries suggests Bessent’s scheme isn’t dead-on-arrival. Even Cambodia, which has steadily deepened its ties with Beijing, swiftly offered to lower trade barriers to the US.

The trouble for Bessent though is Trump’s “America First” ideology has no explicit concern for the development of others. And, as detailed here in February, when he was pressed on the role of allies in a China strategy last October, Trump’s response was, “Our allies have taken advantage of us more so than our enemies.”

So there’s no indication the 78-year-old Republican aligns with his Treausry secretary’s gang-up-on-China approach. Meantime, other members of the economic team, including Lutnick and presidential adviser Peter Navarro, are focused on the flood of cash, ostensibly earmarked for domestic manufacturing, a high tariff wall may temporarily provide. They’re not championing grand geo-economic strategy.

Another challenge? Countries such as Vietnam and Cambodia that have been threatened with high tariffs lack the capacity for large-scale investments (unlike Japan and South Korea) that could create American jobs. So it’s not clear what sort of deals could be possible.

Trump this week highlighted that deals can go beyond trade. So would Cambodia bar Chinese vessels from the Ream Naval Base that’s seen as a potential China military hub in Southeast Asia? Only time will tell. Washington’s surrender of soft-power influence cannot have helped. As Trump shut down US Agency for International Development assistance in Cambodia, China has ramped up.

So Bessent has his work cut out for him. And an early-July deadline, as Trump’s 90-day pause ticks down.