U.S. Treasury Secretary Scott Bessent Interviewed on Tax Deadline Day
On April 15, U.S. Treasury Secretary Scott Bessent was interviewed regarding inflation, interest rates, the possibility of recession, tariff negotiations, and trade policies with China. He emphasized that the U.S. economy is not as dire as it may seem, and that the White House’s tripartite plan (tariffs, tax cuts, and deregulation) will become clearer within 90 days.
Current Economic Situation: Egg Prices Down, Employment Data Stable, Consumption Holds Up
Bessent began by stating:
- Egg prices have dropped over 50% compared to their previous peak.
- Last week saw an increase of 228,000 jobs, surpassing the expected 150,000.
- Credit card companies and senior executives from major banks reported that “consumer spending is stable.”
- The overall conditions for the stock market, interest rates, exchange rates, and energy prices are not bad, with the Financial Conditions Index (FCI) remaining stable.
Bessent emphasized that there are no significant issues visible from micro data and warned against pessimistic future predictions.
Facing Recession Warnings: Not Just Tariffs, Three Initiatives Underway
In response to warnings of recession from Goldman Sachs and JPMorgan CEO Jamie Dimon, Bessent believes that the focus on tariffs is excessive, overlooking that the Trump administration is actually pursuing a “three-pronged” approach:
- Tariff policy is used for negotiations and to apply pressure on trade partners.
- Continuation of the 2017 tax cuts to make them permanent.
- Significant deregulation, with hopes that the effects of reforms will gradually emerge in the third and fourth quarters of this year.
He stressed that the economy should not be viewed solely through the lens of Wall Street, as the White House is currently focused on supporting the people and small businesses.
Is Falling Oil Prices Good or Bad? Bessent Responds: You Can’t Have It All
In response to claims that “falling oil prices signify a deteriorating economy,” Bessent replied: “Two weeks ago, we celebrated the drop in 10-year Treasury yields as our success, and now we’re saying that an increase indicates a collapse of the dollar? Market reactions are overly emotional.”
He pointed out that if China were to sell U.S. Treasuries in retaliation for tariffs, the U.S. has countermeasures, such as:
- The U.S. could repurchase Treasuries.
- The Federal Reserve could assist in stabilizing the market.
- Currently, it appears that China has not sold off its holdings but continues to maintain them.
Current Status of Tariff Delays: Significant Progress Expected Within 90 Days
With only 90 days left until the “tariff delay period,” Bessent stated:
- Both the U.S. and China may meet during the IMF World Bank annual meetings.
- The U.S. is negotiating with 14 other major trading partners.
- While an immediate agreement may not be possible, a consensus should be achievable.
Future Direction of Tariffs: Adjustments Based on Goodwill, U.S. Retains Flexibility
Regarding whether tariffs will exceed the current 145%, Bessent humorously remarked: “I will not reveal the President’s negotiation strategy on national television, but the President is willing to put everything on the table.”
In response to criticisms that U.S. tariffs are “unilateral bullying,” Bessent countered: “They steal intellectual property, create trade barriers, and subsidize industries; these are the real bullies.”
What Does an Ideal U.S.-China Agreement Look Like? The Focus is on China’s Rebalancing
Bessent indicated that for the U.S. and China to reach a consensus, two major issues need to be addressed:
- China must cease subsidizing its manufacturing sector and shift focus to stimulating domestic demand and consumption.
- The U.S. needs to rebuild its manufacturing sector and reduce reliance on imports.
He added that the ideal scenario currently is for China to reduce exports while the U.S. expands domestic demand, achieving a more balanced global economy.
Tax Reforms and Middle-Class Support Measures Expected Soon, Tax Policy to Clarify Within 90 Days
Bessent revealed that the upcoming tax reform proposal will include the following directions:
- Individuals earning less than $100,000 will have the following items exempt from taxation:
- Tips
- Social Security benefits
- Overtime pay
- Loan interest for purchasing American cars, which will be tax-deductible.
- For businesses:
- New factories and equipment can be depreciated in one go (full deduction).
Bessent pointed out that in the past, these policies did not have the greatest impact on the wealthy but rather on lower-income families, whose asset growth rate outpaces that of the rich. This time, adjustments will be made again.
He also addressed corporate executives: “We understand that uncertainty is high right now, but within 90 days, we will provide specific directions regarding tariffs, tax cuts, and deregulation. Please give us a little more time.”
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