US Treasury Secretary Scott Bessent identified Taiwan's overwhelming control of advanced semiconductor production as the gravest danger facing the global economy, warning Tuesday that any disruption would trigger catastrophic consequences.
"I would say that the single biggest threat to the world economy, the single biggest point of single failure, is that 97% of the high-end chips are made in Taiwan," Bessent told the World Economic Forum in Davos, Switzerland.
He described a potential blockade or destruction of the island's manufacturing capacity as an "economic apocalypse," emphasizing Washington's efforts to relocate semiconductor production to American soil.
Bessent announced efforts to form a critical minerals alliance, including the G7, Australia, India, Mexico and South Korea, to break China's stranglehold on essential resources.
He said the bloc is working rapidly to establish independent mining, processing and refining capabilities to prevent Beijing from wielding "the sword over our heads."
Bessent cited rare earth magnet production resuming in his home state of South Carolina after a 25-year absence, with producers projecting they can meet most US demand within two years.
The US plans to impose 10% tariffs on Feb. 1 against eight nations that deployed troops to Greenland if Denmark refuses to relinquish the territory, Bessent confirmed.
US President Donald Trump said Washington would impose tariffs on goods from Denmark, Norway, Sweden, France, Germany, the UK, the Netherlands and Finland, rising to 25% in June, until there is a deal for "the complete and total purchase of Greenland."
Bessent defended Trump's approach to NATO, noting European allies agreed to meet defense spending commitments after years of underfunding, while Washington has contributed $22 trillion, more than the entire alliance, since 1980.
He said Europeans have diverted resources to social programs, infrastructure and education rather than defense. "It's time for them to pay more."
Speaking at a news conference at the USA House on the forum's sidelines earlier in the day, he distinguished Greenland-related tariffs from other trade negotiations, urging countries to proceed with agreed deals that "provide great certainty."
Bessent defended the US-Europe alliance despite the dispute about Greenland. "Of course, Europe is an ally. The US NATO membership is unquestioned … but that does not mean that we cannot have disagreements," he said.
The Treasury secretary reported progress in trade talks with Beijing, including the completion of annual soybean purchases totaling 25 million tons.
Bessent described fentanyl-related tariffs on Mexico, Canada and China as successful in forcing cooperation, noting "a substantial drop" in precursor drug flows after Chinese officials came to negotiations. He added that the threat of tariffs has worked well with Beijing when they rolled back rare earth export controls in October.
On fulfillment of agreements are earth magnets flow from China, he said it is "quite satisfactory."
Bessent also dismissed concerns that the Supreme Court might block the Trump administration's tariff policies, calling it unlikely the court would overturn the president's "signature" economic agenda.
