Treasury Secretary Could Moderate Trump's Tariff Plans
President-elect Donald Trump's Treasury Secretary nominee, hedge fund CEO Scott Bessent, has talked about tariffs as a way to "escalate to de-escalate," with the goal of "getting rid of all the tariffs."
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The stock market surged Nov. 25 on the belief that Bessent is somewhat moderate on tariffs, since he told CNBC earlier in the month, "I would recommend that tariffs be layered in gradually.” In a recent interview, Bessent said that getting China to stop overproducing for export is a 10-year project, and said "my trigger-happy tariff friends" don't understand it will take time to rebalance global trade.
In January, Bessent wrote a note to clients that said in part: "We find it unlikely that across-the-board tariffs ... would be enacted at the same time as he moves to fix the immigration crisis. The tariff gun would be always loaded and on the table, but rarely discharged." He then added that there are still "strategic and national security issues" with China.
Lori Wallach, a long-time free-trade skeptic, tweeted before Bessent was chosen that Bessent "loves" the World Trade Organization, and wrote: "So much for Trump's TARIFF love! His Treasury Sec finalists are free traders."
However, Bessent's recent interviews suggest he is open to managed trade, or friendshoring, as the Biden administration called it. Bessent said you could delineate green, yellow and red categories, and countries could be in any given category, depending on a number of actions or inactions.
"The green box is shared values, shared economies, shared defense, shared currency goals," he said, naming Australia as a "real ally."
"If you're India, you want to have 20% tariffs, you want to buy sanctioned Russian oil, you're in the yellow box, and by the way, you want to keep buying that oil, you're moving toward the red box," he said.
Similarly, in a recent opinion piece, Bessent endorses using trade as leverage for other foreign policy goals, like migration, as Trump did in his first term. "Whether it is getting allies to spend more on their own defense, opening foreign markets to U.S. exports, securing cooperation on ending illegal immigration and interdicting fentanyl trafficking, or deterring military aggression, tariffs can play a central role," he wrote.
Coalition for a Prosperous America, a pro-American manufacturing group that was closely allied with Trump's tariff policy during his first term, has not directly criticized Bessent since his selection, but CEO Michael Stumo argued vociferously for former U.S. Trade Representative Robert Lighthizer to be chosen rather than "Brash Wall Street/Finance guys." He wrote on Twitter: "As an attorney representing American companies in trade cheating cases, he faced and BEAT the best white shoe lying lawyers who whored for Chinese predatory companies trying to avoid being held accountable. He has been in their shorts, saw their books, and knows where the bodies are buried."
He also argued that there would be a "MASSIVE BATTLE" on putting "ACROSS THE BOARD TARIFFS of perhaps 20% as a part of the freaking US tax code" in a tax cut extension bill next year. "Congress trusts him. Even globalist Senators and Congressmen trust him. He knows how Congress works. No other candidate can come close," he wrote.
Lighthizer hasn't been yet named for any position in the second Trump administration. Trump also hasn't named a USTR, but in his announcement of Howard Lutnick for Commerce Secretary, he suggested that Lutnick would lead on all trade negotiations, and that the USTR would report to him.