{"id":1132,"date":"2025-04-12T23:02:47","date_gmt":"2025-04-12T23:02:47","guid":{"rendered":"https:\/\/www.insuracarelife.com\/blog\/bessent-takes-tricky-center-stage-as-trade-wars-roil-u-s-economy\/"},"modified":"2025-04-12T23:02:47","modified_gmt":"2025-04-12T23:02:47","slug":"bessent-takes-tricky-center-stage-as-trade-wars-roil-u-s-economy","status":"publish","type":"post","link":"https:\/\/www.insuracarelife.com\/blog\/bessent-takes-tricky-center-stage-as-trade-wars-roil-u-s-economy\/","title":{"rendered":"Bessent Takes Tricky Center Stage as Trade Wars Roil U.S. Economy"},"content":{"rendered":"<div data-testid=\"companionColumn-0\">\n<div class=\"css-53u6y8\">\n<p class=\"css-at9mc1 evys1bk0\">The traditional gathering of former Treasury secretaries to welcome a newly minted one into the fold is usually a lighthearted and pleasant affair. But when the group convened this month, on President Trump\u2019s \u201cLiberation Day,\u201d the tone was strikingly serious.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">The dinner, organized by former Treasury Secretary Steven T. Mnuchin, took place at a moment of tumult for the U.S. economy. The president had upended global trade with punishing tariffs on both allies and adversaries, and Treasury Secretary Scott Bessent was at the center of it, defending a policy that many in the room viewed as economic malpractice.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">\u201cThe mood was somber,\u201d said W. Michael Blumenthal, 99, who led the Treasury Department in the Carter administration and was in attendance.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">Mr. Bessent was pressed over the strategy behind the tariffs and the impact that they would have on the economy, according to Mr. Blumenthal and other people familiar with the dinner. At times, Mr. Bessent elevated his voice when his predecessors confronted him about Mr. Trump\u2019s approach.<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n<div data-testid=\"companionColumn-1\">\n<div class=\"css-53u6y8\">\n<p class=\"css-at9mc1 evys1bk0\">\u201cHe didn\u2019t just smile,\u201d Mr. Blumenthal recalled. \u201cThere he is \u2014 he has to defend it.\u201d<\/p>\n<p class=\"css-at9mc1 evys1bk0\">The guest list included Robert E. Rubin, Henry M. Paulson, Lawrence H. Summers, Timothy F. Geithner and Jack Lew. Former Treasury Secretary Janet L. Yellen was traveling in Australia and did not attend, a spokesman said.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">The Treasury Department declined to comment on the dinner, and Mr. Bessent declined to comment for this article.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">The bumpy welcome was reflective of Mr. Bessent\u2019s first few months in what might be the most difficult job in Washington. Wall Street hailed his nomination in hopes that he would be a voice of moderation who could temper Mr. Trump\u2019s instincts to lob scattershot tariffs around the world.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">Now Mr. Bessent, 62, is at the center of an ugly trade war with China that economists fear could reignite inflation and cause a global recession. By most metrics, the U.S. economy was the strongest in the world when Mr. Trump took office in January, leading some analysts to describe the president\u2019s actions as a historic self-inflicted wound akin to a soccer player\u2019s scoring a goal against his own team.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">\u201cIt\u2019s one of the largest own-goals in diplomacy and economics and trade that I think we\u2019ve ever done,\u201d said David Autor, an M.I.T. economist.<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n<div data-testid=\"companionColumn-2\">\n<div class=\"css-53u6y8\">\n<p class=\"css-at9mc1 evys1bk0\">Before joining the administration, Mr. Bessent had expressed his own doubts about tariffs. But Mr. Trump\u2019s protectionist trade instincts are notoriously hard to corral.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">As a former hedge fund manager who founded Key Square Group, Mr. Bessent wrote in a letter to investors just last year that he was skeptical of tariffs: \u201cTariffs are inflationary and would strengthen the dollar \u2014 hardly a good starting point for a U.S. industrial renaissance.\u201d<\/p>\n<p class=\"css-at9mc1 evys1bk0\">But as Treasury secretary, Mr. Bessent has had to publicly stick close to the administration\u2019s pro-tariff stance. He now argues that tariffs will not be inflationary but will instead inflict a one-time \u201cprice adjustment\u201d on the economy.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">Some of his comments have raised eyebrows. After China responded to Mr. Trump\u2019s tariffs by imposing higher levies on American products, Mr. Bessent downplayed the potential impact on the U.S. economy, saying \u201cSo what?\u201d In his view, the United States holds the upper hand, because China is reliant on exports to America.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">Two days later, Beijing retaliated with even stiffer levies, escalating the economic fight between the world\u2019s largest economies and sending jitters through financial markets.<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n<div data-testid=\"companionColumn-3\">\n<div class=\"css-53u6y8\">\n<p class=\"css-at9mc1 evys1bk0\">As markets suffered their worst rout in years, Mr. Bessent suggested that people close to retirement were probably not paying much attention to the falling value of their nest eggs.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">\u201cAmericans who want to retire right now, Americans who have put away for years in their savings accounts, I think they don\u2019t look at the day-to-day fluctuations of what\u2019s happening,\u201d he said on NBC\u2019s \u201cMeet the Press\u201d last Sunday.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">The Democratic National Committee seized on Mr. Bessent\u2019s comment that the economy is in \u201cpretty good shape,\u201d noting that the stock market had been tanking.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">Mr. Bessent has been thrust into a somewhat uncomfortable position given that the administration\u2019s trade agenda has been more aggressive than most experts anticipated.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">Mr. Trump imposed tariffs on nearly every country, including levies of at least as 145 percent on Chinese imports. The moves sent stocks plunging, strained the bond market and led economists to raise their recession odds.<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n<div data-testid=\"companionColumn-4\">\n<div class=\"css-53u6y8\">\n<p class=\"css-at9mc1 evys1bk0\">Some top Republican lawmakers, including Senator Ted Cruz of Texas, have also come out against the tariffs. Mr. Cruz warned on the latest episode of his podcast that tariffs are taxes on consumers.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">\u201cIt\u2019s terrible for America,\u201d he said. \u201cIt would destroy jobs here at home and do real damage to the U.S. economy if we had tariffs everywhere.\u201d<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n<div data-testid=\"companionColumn-5\">\n<div class=\"css-53u6y8\">\n<p class=\"css-at9mc1 evys1bk0\">Mr. Bessent has managed to moderate Mr. Trump\u2019s approach, to a degree. During a trip to Mar-a-Lago last Sunday to brief the president on the volatility, Mr. Bessent persuaded him to pause so-called reciprocal tariffs on dozens of countries and begin trade talks with those nations. Upon returning, Mr. Bessent, who had maintained that he was mostly focused on tax policy, said he was taking a leading role in trade talks.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">On Friday evening, the administration <a class=\"css-yywogo\" href=\"https:\/\/content.govdelivery.com\/bulletins\/gd\/USDHSCBP-3db9e55?wgt_ref=USDHSCBP_WIDGET_2\" title=\"\" rel=\"noopener noreferrer\" target=\"_blank\">published a rule<\/a> that appeared to exempt smartphones, computers, semiconductors and other electronics from most of the president\u2019s punishing tariffs on China, giving tech companies like Apple and Dell a reprieve.<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n<div data-testid=\"companionColumn-6\">\n<div class=\"css-53u6y8\">\n<p class=\"css-at9mc1 evys1bk0\">However, the deepening confrontation with China suggested that there will be more volatility as Mr. Bessent engages in debates with Peter Navarro, Mr. Trump\u2019s trade adviser, and Howard Lutnick, the commerce secretary, who have counseled a more hawkish approach.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">\u201cThe best part is that he can be there as an adviser,\u201d said Marlene Jupiter, who worked with Mr. Bessent for five years when he ran Bessent Capital. She said his deep knowledge of markets should help calm investors who were nervous about the trade uncertainty, but \u201cI don\u2019t know how much Trump listens or does not listen.\u201d<\/p>\n<p class=\"css-at9mc1 evys1bk0\">The Treasury secretary\u2019s inability to restrain Mr. Trump more effectively has dismayed some investors.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">\u201cIn the sense that I\u2019m disappointed in Bessent, it\u2019s that Mnuchin and Cohn never let it get this far,\u201d said Spencer T. Hakimian, the founder of Tolou Capital Management, a New York hedge fund. Mr. Mnuchin, as Treasury secretary, and Gary Cohn, as director of the National Economic Council, were two economic advisers in Mr. Trump\u2019s first term who warned him against the overuse of tariffs.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">\u201cThe whole reason why markets were interested in Bessent,\u201d Mr. Hakimian added, \u201cis because they saw him as being Mnuchin 2.0 \u2014 a traditional Wall Street guy who would not let it get to this.\u201d<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n<div data-testid=\"companionColumn-7\">\n<div class=\"css-53u6y8\">\n<p class=\"css-at9mc1 evys1bk0\">Mark Sobel, who served at the Treasury Department for nearly four decades, noted that Mr. Bessent was being credited with scaling back the reciprocal tariffs but raised questions about how he has publicly justified them.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">\u201cIt will be hard for Americans to see him as a credible and serious economic spokesperson given comments such as that the tariff ups and downs were the strategy all along, or citizens shouldn\u2019t fret about day-to-day stock market fluctuations when their 401(k)s are tanking,\u201d Mr. Sobel said.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">Ultimately, however, final decisions over tariffs will lie with Mr. Trump.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">\u201cWhile the Treasury secretary is seniormost economic official in administration, the president is the captain of any team,\u201d said R. Glenn Hubbard, a former deputy assistant secretary at the Treasury Department. \u201cWhatever the Treasury secretary says needs to be on the same page as the president.\u201d<\/p>\n<p class=\"css-at9mc1 evys1bk0\">During the dinner with Mr. Bessent, the former secretaries offered encouragement, counsel and historical perspective amid their concerns about Mr. Trump\u2019s policies, people familiar with the matter said.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">In one exchange, Mr. Summers, who served in the Clinton administration, told pointed stories about George Shultz, who was nominated to be Treasury secretary by President Richard M. Nixon in 1972 and stood up to his boss over defunding universities and using the Internal Revenue Service to audit political enemies.<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n<div data-testid=\"companionColumn-8\">\n<div class=\"css-53u6y8\">\n<p class=\"css-at9mc1 evys1bk0\"><a class=\"css-yywogo\" href=\"https:\/\/x.com\/LHSummers\/status\/1907846909164675328?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1907846909164675328%7Ctwgr%5Edcd64ee30b988a37836c44047a69dd326b7f8bda%7Ctwcon%5Es1_&amp;ref_url=https%3A%2F%2Fwww.wsj.com%2Flivecoverage%2Ftrump-tariffs-trade-war-stock-market-04-03-2025%2Fcard%2Fformer-treasury-secretary-summers-says-he-would-have-resigned-over-trump-s-tariff-plan-6sEKeaHXxqlEmdPhZTnt\" title=\"\" rel=\"noopener noreferrer\" target=\"_blank\">In a recent social media post<\/a>, Mr. Summers said that if he were still in government, he would have resigned over the analysis that the Trump administration produced to support its tariff plan.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">Mr. Blumenthal said he wished Mr. Bessent luck in a job that is more complicated when \u201cwhat is best for country is different than what the president wants.\u201d<\/p>\n<p class=\"css-at9mc1 evys1bk0\">He added that traditionally the welcoming meals were light on policy discussion or advice from Treasury veterans.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">\u201cThis time was a very special occasion,\u201d Mr. Blumenthal said.<\/p>\n<p class=\"css-798hid etfikam0\">Ana Swanson<!-- --> contributed reporting.<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n","protected":false},"excerpt":{"rendered":"<p>The traditional gathering of former Treasury secretaries to welcome a newly minted one into the fold is usually a lighthearted and pleasant affair. But when the group convened this month, on President Trump\u2019s \u201cLiberation Day,\u201d the tone was strikingly serious. The dinner, organized by former Treasury Secretary Steven T. Mnuchin, took place at a moment [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":1133,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[820,822,826,825,823,424,246,821,581,824],"class_list":["post-1132","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog","tag-bessent","tag-center","tag-economy","tag-roil","tag-stage","tag-takes","tag-trade","tag-tricky","tag-u-s","tag-wars"],"_links":{"self":[{"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/posts\/1132","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/comments?post=1132"}],"version-history":[{"count":0,"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/posts\/1132\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/media\/1133"}],"wp:attachment":[{"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/media?parent=1132"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/categories?post=1132"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/tags?post=1132"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}