Treasury Secretary Scott Bessent on Thursday defended President Donald Trump’s aggressive trade policies and appeared to double down on Trump’s warning that the enactment of new tariffs may cause disruptions.
“Access to cheap goods is not the essence of the American Dream,” Bessent said during a speech at the Economic Club of New York. “The American Dream is rooted in the concept that any citizen can achieve prosperity, upward mobility, and economic security. For too long, the designers of multilateral trade deals have lost sight of this. International economic relations that do not work for the American people must be reexamined.”
Trump earlier this week implemented 25 percent tariffs on Canada and Mexico. He has since offered reprieves to the auto industry and most Mexican products, but the White House says he still plans to move ahead with “reciprocal” tariffs on imports.
The possibility that large quantities of foreign goods may soon be subject to new levies led many companies to ramp up imports before they take effect, which caused the trade deficit to surge to a new record and threatens future investment and hiring.
Bessent said new tariffs would not be inflationary in the long term, saying the one-off effects are likely to be transitory. Similar claims on the part of President Joe Biden’s administration proved politically fatal as inflation surged in the wake of supply chain disruptions and massive government payments to Americans during the pandemic.
“Can tariffs be a one-time price adjustment? Yes,” Bessent said during a follow-up Q&A with Larry Kudlow, who led the National Economic Council during Trump’s first term. Bessent said that while he wouldn’t comment on monetary policy, he “would hope that the failed team transitory can get back together” and agree that tariffs are one-off price adjustments.
The Treasury secretary’s comments belie the importance that lower costs of goods and services can have for American consumers, said Daniel Hornung, the former deputy director of Biden’s National Economic Council.
While older trade agreements merit reexamination, “if people are earning higher incomes because they have good jobs, and the economy is open and innovative enough where the cost of goods and services are going down, then over time that’s going to mean higher living standards,” Hornung said. “That’s a goal that policymakers should pursue.”
Bessent, a former hedge fund executive and George Soros protege who emerged as one of Trump’s top economic policy advisers during the campaign, also said he planned to utilize his role as the Financial Stability Oversight Council chair to better coordinate federal regulatory activity. He downplayed reports that the administration may consolidate federal regulatory agencies.
“We need our financial regulators singing in unison from the same song sheet,” he said. “To be clear, this does not mean consolidation of agencies, but coordination via Treasury, such that our regulators work in parallel with each other and industry.”