Bessent on Tariffs, Deficits and Embracing Trump’s Economic Plan

The US Treasury Secretary has the ear of an impulsive president—and nervous investors worldwide hope it stays that way. An exclusive interview. By Daniel Flatley and Erik Schatzker

See omnystudio.com/listener for privacy information.

Episode Transcript

Speaker 1 (00:00):
Bessant on tariff's deficits and embracing Trump's economic plan. The U. S.
Treasury Secretary has the ear of an impulsive president, and
nervous investors worldwide hope it stays that way. An exclusive
interview by Daniel Flatley and Eric Shatzker, read aloud by
Mark Ledorf. On April sixth, the Sunday after Donald Trump

(00:23):
unveiled his Liberation Day tariffs, Treasury Secretary Scott Bessant joined
the President on a flight back to Washington from mar
A Lago. Bessant wanted to talk about damage control. By then,
the image of Trump in the Rose Garden waving placards
displaying import duties as high as forty nine percent had
spooked investors around the world, triggering the biggest two day

(00:44):
sell off in stocks since the pandemic. We are in
the process of destroying confidence in our country as a
trading partner, as a place to do business, and as
a market to invest capital. Billionaire investor Bill Ackman wrote
in a post on x warning of a coming economic
nuclear Wainy enter J. P. Morgan Chase chief executive officer
Jamie Diamond chimed in, saying the tariffs were likely to

(01:06):
reignite inflation and possibly induce a recession. Larry Summers, a
former Treasury secretary, predicted the US would suffer job losses
in the millions. Bessant, formerly one of the world's top
hedge fund managers, had told his clients only months earlier
that under Trump, the tariff gun will always be loaded
and on the table, but rarely discharged. In Wall Street's eyes,

(01:29):
he was supposed to be the safety catch. So where
was he After a forty year career in finance that
involved working for investing legends such as George Soros and
Stanley Druckenmiller. Bessant has his own ideas about how to
soothe panicky traders. I think I could have made the
markets go up on Liberation Day, he says in a
late July interview in his office at the Treasury Department,

(01:52):
if we had said, here are the numbers. These are
the maximum tariff levels if you don't retaliate, but we're
open for negotiation. On Air Force one that Sunday in April,
Besen says he proposed an immediate tariff pullback to diffuse
the crisis, but the President was undeterred. He wanted to
scare America's trading partners to the bargaining table. Let's let

(02:12):
it run a couple more days, he told Bessant, Do
not say we're willing to negotiate. It wasn't until a
few hours before the levies were supposed to kick in
that Trump finally relented. On Wednesday, April ninth, he announced
a ninety day pause on so called reciprocal tariffs and
a ten percent interim rate for every country but China.
Speaking to reporters outside the White House, Bessont praised the

(02:35):
president's great courage for staying the course. Stocks roared back.
The story everyone on Wall Street wants to believe is
that Bessant, one of their own, persuaded a reluctant Trump
to capitulate on tariffs after friends with billions of dollars
at risk called him to complain. That's the thinking behind
the now infamous acronym coined by a Financial Times columnist,

(02:58):
Taco for Trump always out. Bessant insists that's wrong. The
market did not force him. He says he has a
higher risk tolerance than I do. The episode sheds light
on how decisions are being made in Trump's second administration.
Many on Wall Street and elsewhere see Bessant as a
moderating influence, someone who can pull Trump back from the brink,

(03:20):
at least on economic matters. Yet, during a lengthy interview,
he repeatedly downplayed his role, casting himself as a humble
counselor whose job is to help the president channel his
populist impulses into policies, then translate those for markets. I
do my job, give him options and outcomes present, and
then manage the narrative from there. He says that might

(03:42):
come across as unduly modest for someone as respected as Bessant,
but it's a tried and true strategy. Whether you're negotiating
at the G twenty, you're negotiating a trade deal, or
you're negotiating with Congress, you'd better understand that you're speaking
on behalf of the president, says Stephen Mnushan, who was
Trump's Treasury secretary from twenty seventeen to twenty twenty one.

(04:03):
If you're not doing what the president wants and you
can't represent him, well, the role has no power. In
less than seven months on the job, Bessant, a sixty
two year old South Carolinian, has shown he can calm
financial markets as the de escalationist in a trigger happy administration.
Rightly or wrongly, he gets credit not only for Trump's
decision to back down on the Liberation Day tariffs, but

(04:25):
also for persuading the President not to follow through so
far on his oft repeated threat to fire Federal Reserve
Chair Jerome Powell. At the same time, he's largely escaped
scrutiny for failing to deliver on his pledge that the
administration would be laser focused on cutting the budget deficit
and driving down bond yields. Even on matters that have

(04:46):
alarmed former peers in the investment business, Bessant has firmly
backed the president. One such occurrence played out on August first,
when Trump, furious at a report showing a sharp slowdown
in hiring, suddenly fired one of the country top officials
responsible for economic data and accused her of manipulating the
job's numbers. That immediately threw into question the integrity of

(05:08):
future statistics, and with it, the empirical foundation that underpins
not only Federal Reserve interest rate decisions, but also the
entire twenty nine trillion dollar US Treasury bond market. Bessant,
speaking later to MSNBC said Trump's decision was warranted by
the frequency of huge revisions to employment figures and that
a change was overdue. On August eleventh, Trump named E. J. Antony,

(05:33):
chief economist of the Conservative Heritage Foundation, to lead the
Bureau of Labor Statistics. Bessant's brightly lit corner office overlooking
the White House has regained a period feel since he
brought back its traditional furniture from storage. On his desk
is a glass of ice and a small bottle of
doctor pepper, which he calls his dirty vice. A portrait

(05:54):
of Alexander Hamilton, the nation's first Treasury Secretary, hangs above
the fireplace, and beside it a framed reproduction of the
sixty eight to twenty nine roll call vote from Besson's
Senate confirmation on January twenty seventh. In the middle of
the room sits a small table of his own that
he uses to host white tablecloth lunches with legislators from
both parties, amid personal effects photos of his parents, his

(06:17):
husband John, and their children Coal fifteen and Caroline eleven.
Sits a baseball cap emblazoned with the words Trump was
right about everything. Tall dressed in a suit and tie
with the sweep of silver hair, Bessant looks every inch
the Southern gentleman, which may explain why the Secret Service
assigned him the code name swamp Fox, after an eighteenth

(06:39):
century South Carolina planter turned general. On this day, he
shows none of the reticence or halting speech that sometimes
characterize his TV appearances, as over the course of two hours,
he describes his relationship with Trump, explains his economic philosophy,
and shares some of his more pressing priorities as Secretary
while juggling a typically for schedule staff meetings, a trade

(07:02):
delegation from Singapore, and an on camera interview. He was
just back from a weekend trip to Japan for the
World Expo and about to head to Stockholm for a
third round of trade talks with China. In conversation, Besson
was clearly pleased that despite dire warnings from the establishment
that Trump's disdain for diplomatic norms and indifference towards the
rule of law would destroy the economy. The S and

(07:25):
P five hundred index had advanced ten percent since the
November fifth election, but stocks have given up some of
those gains in recent weeks. As evidence of a slowdown
piled up. The July employment report showed the weakest three
months of job growth since the pandemic. In the meantime,
a softening in consumer spending since the beginning of the
year suggests tariffs are beginning to bite. The Treasury Secretary

(07:49):
is sometimes described as the country's chief financial officer, but
whether by dent of ambition or a circumstance, or a
combination of the two, Besson's responsibilities go far beyond the
usual j In addition to handling the standard portfolio, debt issuance,
tax collection, social security payments, financial regulation, foreign investment screening,

(08:10):
economic sanctions, Bessant has been tapped to take on some
of the most difficult and high profile assignments of Trump
two point zero. He's taken the lead in trade talks
with China, Japan, and other Asian nations, resulting in four
bilateral pacts to date. Bessant also crafted the April Deal,
giving the US an economic interest in Ukraine's mineral and

(08:31):
energy reserves. Another item Trump put on his to do
list restructure the government's student loan portfolio, which at one
point seven trillion dollars constitutes the single biggest asset on
the US balance sheet. When Trump's signature piece of domestic legislation,
the One Big Beautiful Bill Act, ran into obstacles in Congress,

(08:52):
Bessant was instrumental in clearing the way, first by negotiating
a compromise with senators on tax relief for high cost
of living districts, and then by persuading holdout Republicans in
the House of Representatives to accept a phase out schedule
for clean energy tax credits. In interviews, he dismissed accusations
that the party indulged in accounting gimmickry that overstates the

(09:13):
bill's economic benefits while grossly underestimating its impact on the
federal debt. He also resolved an international standoff on corporate taxes.
Under an agreement with Group of seven finance ministers, US
companies will be exempted from a global minimum tax on multinationals.
And while he says he has no interest in succeeding Powell,

(09:33):
Trump's whipping boy and first term appointee, Besant is running
the process to find a new FED chair. I'm impressed
by how well he's navigated the political environment, says Druck
and Miller, whom Bessant used to talk to daily when
he was running his hedge fund. Bessant likes to call
himself the nation's top bond salesman, evoking the image of
a stern faced man with a green eye shade going

(09:55):
over coupon payments in a stuffy office. But in practice,
the one one thousand employee Treasury under his watch has
turned into a department of everything, where on any given day,
trade deals are being negotiated, fiscal policy is being crafted,
and national security is being fortified. Bessant is even serving
as acting Commissioner of the Internal Revenue Service. All of

(10:18):
this gives him enormous sway over the US economy and
reveals that in practice, his role goes far beyond that
of sounding board for the president. Born in Conway, South Carolina,
to a prominent family whose ancestral roots in America traced
back to seventeenth century French Huguenots, Bessant was the eldest
of three children. His father, Homer, was the founder of

(10:41):
a real estate firm along the state's coastal Grand Strand
and a pillar of local civic life. Bessant initially hoped
to attend the US Naval Academy and was offered an
appointment by his local congressman, but he turned it down,
he says, because as a gay man, he faced the
risk of being court martialed. Instead, he enrolled at Yale University,

(11:01):
where he majored in political science. On the surface, Bessant's
old stock pedigree made him a perfect fit at preppy
early nineteen eighties Yale, except the family business had fallen
into bankruptcy. We came from extreme privilege and my father
lost it all, he says. While fellow students could afford
fancy cars and clothing. Menusian's father was a partner at

(11:23):
Goldman Sachs, Bessant had to earn a scholarship and worked
part time jobs. Bessant had hopes of going into journalism,
but after running for editor of the Yale Daily News
and losing, he answered a campus listing for an internship
in the family office of Jim Rogers, a Yale graduate
who started the Quantum Fund in nineteen seventy three with Soros.

(11:44):
Rogers had recently retired to manage his own money and
tour the world on his motorcycle. He hired Bessant for
a summer internship and let him sleep on a sofa
at his office in New York. Bessant found the work
appealing and went on to full time jobs at Brown
brother Harriman, a brokerage, the Olayan Group, a Saudy family
owned business, and Kinnicos Associates, an investment firm founded by

(12:07):
another Yalely Jim Chenos. In August nineteen ninety one, he
joined Soros Fund Management SFM in New York. The hedge
fund industry was still relatively new, and Soros wasn't yet
a Wall Street legend. Bessant, then twenty nine, impressed Drunken Miller,
then the firm's chief investment officer, who found him intellectually

(12:28):
curious and especially liked that he'd learned to short stocks
while working for Chainos. He had a big brain and
a great work ethic, drunken Miller says. Within months, drunken
Miller dispatched him to London, where, after studying the UK
housing market, Bessant reported back that many borrowers could barely
make mortgage payments. Thanks to Bessant, drunken Miller realized that

(12:49):
the Bank of England couldn't raise interest rates very far
without triggering a wave of homeowner defaults and catastrophe for
the economy. Drunken Miller and Soros went on the attack,
shorting the British pound so relentlessly that on September sixteenth,
nineteen ninety two, a day later dubbed Black Wednesday, the
UK had no choice but to devalue its currency. The

(13:11):
trade netted Sorosa then unheard of profit of more than
one billion dollars and the sobriquet the man who broke
the Bank of England. One early sign of Wall Street's
confidence in Bessent came in two thousand, when he left
s f M to start his own firm. Bessant Capital Management,
was at the time the biggest ever hedge fund launch,

(13:32):
raising one billion dollars from clients, including Sorows himself. There,
Bessant honed the skills and style that distinguished him from
fellow macro managers, investors who translate their insights about how
the global economy works into wagers on the bond, stock, currency,
and commodity markets. While Drunken Miller, his mentor, was more
of a trader by nature, Bessant immersed himself in the

(13:55):
mechanics of policy making. He had a clear understanding of
how central Bank's operation and take decisions, says David Sarah,
who first met Besson in nineteen ninety eight while working
as an analyst at what was then ubs Warburg. Other
people in macro were focused on real world events, he
saw opportunity in the clash between theory and practice. Sarah,

(14:16):
who founded London based Algebras Investments, stayed in touch with Bessant,
making a point of seeing him every time he traveled
to New York. While their conversations were mostly about economic
policy and investing, he recalls many instances when Bessant expressed
views that in retrospect are Trump compliant. He wanted China
kicked out of the World Trade Organization. He complained that

(14:39):
Europe wasn't spending enough on defense, and he worried that
the US had lost so much potential for social mobility
that an eighteen year old today wouldn't have the same
chances he'd had. By two thousand and five, after some
of Besant Capital's strategies lost money, he converted the fund
to a family office and gave his investors their capital back.

(14:59):
He returned to Yale as an adjunct professor while moonlighting
as a hedge fund advisor. Bessant might have stayed at
his alma mater had Soros not needed his services again.
In twenty eleven, he accepted the role of Chief Investment
Officer with responsibility for sfm's entire twenty five billion dollar portfolio.
SFM employees remember Bessant as a brilliant risk manager with

(15:22):
a knack for side stepping disaster. In twenty fourteen, for example,
he turned down a request to bankroll a bet against
the Swiss franc. Soon thereafter, Switzerland scrapped its currency peg
to the Euro, causing the frank to soar and forcing
the firm that had proposed the position, Everest Capital, out
of business. Turns out working for Soros was good training

(15:43):
for life in the Trump administration. President Trump has this
incredible risk tolerance and incredible survival instinct, Besson says, mister
Soros is the same way. Unlike many powerful figures on
Wall Street, including Soros, Bessant kept a low profile and
stayed out of the headlines during his years in finance

(16:03):
before emerging as a public advocate for Trump in early
twenty twenty four He says he subscribed to the WASP
dictum that a gentleman's name should appear in the papers
no more than three times over the course of his life,
at birth, when married, and upon dying. If he harbored
any political ambitions, he kept them to himself. Bessant gave
money to candidates from both parties, mostly to Republicans, but

(16:27):
some to Democrats as well. Nothing about the pattern of
his political contributions suggested he'd want to get behind Trump's
America First agenda of tariff's deportations and isolationism. I was
surprised drunken Miller says he and others close to Bessant
thought of him as a Reagan Republican, a fiscal conservative
who believed in free markets, free trade, and small government.

(16:51):
The truth, Bessant says now is he considered joining Trump's
first campaign for the White House in twenty sixteen, but
at the time he'd left Soros to star a new firm,
Key Square Group. Besson says he didn't think it would
be right to abandon his employees, many of whom had
followed him from SFM an institutional client, such as the
New York City Police Officer's pension fund. In the end,

(17:13):
he donated one million dollars to Trump's first term inauguration
and seemed to recede into the political background, except not really.
He was drawn to figures in Trump's orbit, including Steve Bannon,
whom he met at an investor for him in Hong
Kong in twenty seventeen. I quickly sized him up as
the smartest guy in the room, recalls Bannon, who by

(17:35):
that time had been fired from his job as Trump's
chief strategist. He wanted to know everything about Trump's economics,
how he looked at the world, and how it was
going to translate into actual policies that would affect global
capital markets. The two bonded further over a four hour
meal the next day, Bannon says, adding that they've talked
or texted regularly ever since. Winning the confidence of the

(17:58):
MAGA faithful would be challenging for a wealthy hedge fund
manager with close ties to Soros, the protagonist in endless
right wing conspiracy theories, dubbed the most evil man in
the World by Fox News. In the lead up to
the twenty twenty four election, Bessant solicited Bannon's advice on
how to position himself as a candidate for Treasury secretary

(18:18):
or another top economic job in the second Trump administration,
Bannon issued a three point directive, get to know the
economic issues Trump cares about most, particularly trade. Get to
know the people around Trump, including gatekeepers to the right
wing Promaga media universe, and build a relationship with Trump
himself by stepping forward as a major donor in Wall

(18:40):
Street Surrogate. It helped that Bessant was a friend of
Trump's late brother, Robert, and that Robert's widow is godmother
to his daughter. Bessant took the guidance to heart, forging
relationships with key trade and economic advisors to Trump, including
Kevin Hassett, Peter Navarro, and Stephen Moore. He hired Bannon's
well connected personal publicist, Alexandra Priet to broke her introductions

(19:03):
and help him make inroads. He also began appearing on
pro MAGA radio shows and podcasts such as Bannon's War
Room and Breitbart New Saturday, to get his name out
there and talk up Trump and his policies. Arthur Laffer,
the economist whose supply side theory guided Ronald Reagan's tax cutting,
recounts how Bessont made a pilgrimage to Nashville to seek

(19:25):
his support. He came out here to spend the night
and get to know me. Laugher says, he really wanted
my endorsement for Treasury Secretary. I found him to be
a very impressive guy. He's made money, he has a record,
he's a fellow Yale, which does matter, by the way,
and he has all the skills and self confidence that
goes with that. In November twenty twenty three, Bessont decided

(19:47):
to make his move in a meeting with Trump at
mar A Lago. He explained why he believed the then
candidate would win the election and said he wanted to
get involved in the campaign. Trump, Besson says, now had
a really lentless momentum about him, like a stock that
rises even on bad news. He'd get indicted, his popularity
would go up. He says, he'd lose a trial, his

(20:10):
popularity would go up. Bessant recalls that during that visit,
Trump asked if he wanted to chair the Federal Reserve.
He didn't play coy. I said, nope, there's another job
I'd like. Over time, besn't one acceptance in Trump's circle.
As I got to know him, I realized He has
a strong intellect, lots of experience in markets, and a

(20:31):
great knowledge base, says Larry Cuodlow, who served as the
Director of the National Economic Council in Trump one point
zero and is now a TV host on Fox Business.
To Laugher, Besant's mix of skills, personality, and calming presence
are what make him appealing. He's been able to influence
decisions properly, not by confrontation or pursuing a secret agenda,

(20:53):
but by suggesting things Trump may not have thought of.
He says, I saw that in him, and that's why
I recommended him to Trump. As soon as Trump won
the election, Bessant was, according to betting markets, the immediate
favorite for Treasury, but speculation soon swirled about other contenders.
John Paulson, another hedge fund manager who'd made his fortune

(21:13):
in the Great Financial Crisis, Howard Lutnick, CEO of Investment Bank,
Canter Fitzgerald, and the head of Trump's transition team, Bill Haggerty,
the Tennessee Senator, Kevin Warsh, a former Fed governor, and
Mark Rowan, the CEO of Apollo Global Management. By the
week of November eighteenth, Bessant had no idea where he stood.

(21:35):
That Wednesday night, he joined the president elect's eldest son,
Don Junior, and a couple of his close associates for
dinner at the Carriage House, a ritzy member's only social
club in Palm Beach, Florida. Also at the table Rowan,
who'd interviewed with Trump earlier in the day after cutting
short a business trip to Hong Kong and flying straight
to mar A Lago. Thinking back, Bessant shruggs the President.

(21:58):
He says he he keeps his options open. Bessant was
in Palm Beach when Trump called to offer him the
job on November twenty second. Also on the line where
a Vice president elect J. D. Vance and Susie Wiles,
Trump's campaign manager, both of whom, according to a person
familiar with the matter, had pushed for Bessant over Lutnik. Wiles,
now Trump's chief of staff, remains a key ally in

(22:21):
many of the fights that play out in the Oval office,
says this person. Bessant doesn't come to her with problems,
and if he raises concerns about something, she'll listen. Trump too,
has told reporters he finds Bessent a soothing presence in
his cabinet, and more recently, when announcing that Bessant was
no longer a candidate to replace Powell, he said he

(22:42):
does not want it. He likes being Treasury Secretary. He's
doing a really good job. We'll be right back with
Bessant on Tariff's deficits and embracing Trump's economic plan. Welcome
back to Bessant on Tariff's deficits and embracing Trump's economic plan.

(23:03):
Since making the leap from finance to politics, Bessant has
grown used to explaining how he reconciled his personal beliefs
with the extremes of Trump's magisphere. I was kind of
despondent about what was going on with the Biden administration,
he says. Bessant thought US industry was being suffocated by
over regulation and objected to the amount of government spending

(23:24):
on social programs that, in his view, weren't helping to
create pathways to prosperity for ordinary Americans. The political establishment,
both Republican and Democratic, had failed. We've gotten away from
main street capitalism, he says, and I am deeply worried
that no one trusts these parties now. In his view,
the problem stems from decades of US policy that prioritized

(23:48):
cheap imports and thus allowed China, Southeast Asian nations, and
even European countries such as Germany to game the global
trading system. In the old days, they'd sell us a
Sony Trinitron, and we'd sell them a g he says.
As we de industrialized and financialized, we'd sell them private equity,
we'd sell them Google stock, or we'd sell them treasuries.

(24:09):
All of that has distributional effects. You end up with
the coasts very rich and everybody in the middle less rich.
While campaigning for Trump in twenty twenty four, Bessant came
up with an economic plan he dubbed three three three
because it targeted growth of three percent a year in
gross domestic product, a budget deficit equal to three percent
of GDP, and a three million barrel per day increase

(24:32):
in domestic oil production. Then, as Treasury Secretary, he championed
Trump's One Big Beautiful Act, which Congressional budget scorekeepers have
estimated will swell deficits by a combined three point four
trillion dollars over the next ten years. Goldman Sachs, as
of early August, was penciling in a six point six
percent debt to GDP gap for twenty twenty eight. Bessant

(24:55):
says these estimates don't properly account for how Trump's tax cuts, deregulation,
and trade policies will supercharge the economy. If you constrain spending,
which we're doing, and grow three percent, then debt to
GDP will drop. To critics, Bessant is endorsing precisely the
opposite of what he said was his objective. Rather than

(25:15):
actually cutting the deficit, they say he's invoking the same
old tax cuts pay for themselves trope that Laffer and
other supply siders have been employing for decades. The claims
of sustained economic growth that would result from this bill
are massively exaggerated, says Maya McGinnis, who heads the nonprofit,
nonpartisan Committee for a Responsible Federal Budget. Bessant has a

(25:38):
reputation of caring about fiscal issues from before he became
part of the administration, she says, but his defense of
the Reconciliation Bill, which was an absolute budget buster, has
really compromised his credibility on the issue. Even Minution acknowledges
that fiscal discipline will be harder to restore after passing
such a costly bill in Trump one point zero, Oh,

(26:00):
it was easier to grow our way out of the
tax cuts, He says. We had lower interest rates, smaller deficit,
smaller debt. Now you have higher interest rates, bigger deficit,
bigger debt. Holding Bessant to account for his words on
the campaign trail is of course fair. Ultimately, what matters
is whether the Trump administration busts the budget or not.

(26:22):
Sometimes you need to say things to put yourself in
a position of influence, says Neil dudda head of economic
research at Renaissance Macro. Bessant was never a fiscal saint,
but it's hard to say he doesn't care about the
deficit when tariffs have just created the first major new
source of federal revenue in a long time. Bessant has
also shown ideological flexibility on trade. After starting out advocating

(26:45):
a more incremental approach to tariff's he now says Trump's
maximalist threats were crucial to winning concessions from trading partners
and attracting investment to the US. With his Liberation Day gambit,
the President created this huge amount of leverage, Besant argues,
people knew he was serious. Many CEOs are still calculating

(27:06):
the impact of Trump's trade war, which has raised the
effective tariff on goods imported to the US to almost
fourteen percent, about six times what the level was when
he took office, According to calculations by Bloomberg Economics. Ford's
Jim Farley figures the duties will cost his company two
billion dollars in twenty twenty five. Nike, Procter and Gamble,

(27:28):
and Stanley Blackendecker are among those raising prices to offset
the impact. Inflation Fatigued Americans are wary too. In Gallop polls,
the share of respondents who approved of Trump's handling of
the economy has slipped to thirty seven percent from forty
two percent in February. As much as anyone, Besant has
learned firsthand what it's like executing the Trump playbook. In

(27:51):
most administrations, it's the U S Trade Representative who leads
on trade negotiations, and while Jamison Greer, the current USTR,
has been involved, it was Bessent who led the talks
that produced draft agreements with Japan, Indonesia, Singapore, and South Korea.
Part of the reason for Besants outside involvement is his
deep knowledge of Asia, particularly Japan, a country he says

(28:15):
he's visited more than fifty times. Many of the deals
he's helped strike include novel provisions that cater to Trump's
love of pageantry. For example, in addition to accepting a
fifteen percent across the board tariff on exports, Japan agreed
to create a multi billion dollar fund for investing in
the US. In a commemorative photo released by the White House,

(28:36):
the US and Japanese trade delegations are seated in front
of Trump and a large card displaying the number four
hundred billion dollars crossed out and five hundred billion dollars
handwritten above it. The final number was even higher, at
five hundred and fifty billion dollars. Separately, South Korea agreed
to invest three hundred and fifty billion dollars in the US.

(28:58):
A trade deal with China has been more ill, especially
after the country retaliated following Liberation Day by raising tariffs
on US imports. Together with Greer Bessnt met with a
Chinese delegation in Geneva in May and came away with
a tenuous truce. The US dropped its tariff on Chinese
goods to thirty percent from one hundred and forty five percent,

(29:20):
and China in turn lowered its levee on US goods
to ten percent from one hundred and twenty five percent.
Tensions flared again in late May when Beijing refused to
lift export controls on rare earth metals essential for everything
from iPhones to MRI machines to missiles, until Washington eased
restrictions on shipments of cutting edge semiconductors. China presents a

(29:42):
special challenge as a US trade partner because it's not
just an economic rival, but also a geopolitical adversary and
security threat. That's why defense hawks, many aligned with Trump,
protested when to break the deadlock, the administration allowed China
to resume purchases of Nvidia H two twenty chips, which
it needs to power advanced artificial intelligence technology. A third

(30:05):
round of US China negotiations, held in Stockholm at the
end of July, was inconclusive, and on August eleventh, Trump
extended the tariff truce for an additional ninety days. We
have the makings of a deal that will benefit both
of our great nations, Besant told reporters. Former trade officials
say it may take years for a final agreement to

(30:26):
materialize given the breadth and complexity of the underlying issues.
For investors, the bar is much lower. All they really
want is for Besant to keep tensions from boiling over. Ultimately,
the foreign exchange market may prove Besant's most useful tool
against China and like minded nations determined to weaken America's
power and influence. As someone who immersed himself in world

(30:48):
affairs and markets for decades, he understands why the dollar's
role as the principal currency for trade, cross border payments,
and central bank reserves gives the US unparalleled control over
the globe financial system. For Bessant, locking in dollar supremacy
is the number one priority while he's at Treasury. Why
do Russia, China, and Iran want to come off these

(31:10):
dollar payment rails? Because when there's bad behavior, we can
make it very difficult for them with sanctions, He says,
we have extra territorial power with the dollar. Bessant's tenure
in Washington hasn't been without incident, of course. One flashpoint
came early when he granted staffers at Elon Musk's Department
of Government Efficiency partial access to the internal systems that

(31:33):
the Treasury uses to process trillions of dollars a year
in federal payments. Democrats blasted him, with Massachusetts Senator Elizabeth
Warren calling it astonishing mismanagement, but Bessant, initially a fan
of Musks, held his ground and was eventually vindicated by
a court decision. The goodwill didn't last. In mid April, Bessant,

(31:56):
whose manner is as polished as Musks is brazen, clashed
with the billionaire Tesla and SpaceX founder over who should
head the Internal Revenue Service, a unit of the Treasury Department.
The dispute was so intense that they reportedly shouted at
each other and hurled obscenities. Bannon told The Washington Post
there had been a physical confrontation. A few weeks later,

(32:17):
Musk arrived at the Oval office with a black eye.
Asked to explain what happened between them, Bessant won't say
whether the matter came to blows, but notes, with a
touch of deadpan humor, I can one hundred percent say
I did not give him the black eye. Another of
Besson's challenges has been defending Trump's position on the US
Central Bank for decades, the FED has operated with near

(32:40):
total independence, setting interest rates and fulfilling other aspects of
its legal responsibilities, free from interference from Congress or the presidency.
Trump regularly lambastes Powell for not cutting rates, and only
recently backed off threats to fire him. While advising Trump
during the campaign, Bessant floated the provocative idea of a

(33:01):
shadow FED chair, a likely successor to Powell, who could
channel the President's wishes and strong arm the Central Bank's
governors even if he or she wasn't yet running the place. Bessant,
who since dropped the idea, is treading a finer line,
stressing on the one hand that the Fed's rate setting
role is a jewel box whose independence is sacrosanct, while

(33:21):
on the other hand, arguing that the central Bank is
suffering from mission creep and needs to conduct an uncompromising
review of the rest of its operations. They've gotten too
big in the economy, he says, accusing the FED of
overreaching on bank regulation and likening its COVID era bond
buying to gain of function mutations in a virus. Now

(33:41):
that Bessant has taken himself out of the running for
FED chair. Trump has said he's considering Hassett, his top
economic advisor, Walsh, the former FED governor, and two others.
Current FED Governor Christopher Waller, whom Trump nominated in his
first term, is a likely candidate too. For wall Street.
The big question hovering over Bessant is whether financial markets

(34:03):
stay on his side while the Trump administration tries to
re architect the global trading system and engineer a domestic
manufacturing renaissance. If stocks sustain a lengthy drop, investor confidence
may evaporate. An extended spike in bond yields would bust
the budget even more by raising the cost of federal borrowing.
Markets can be fickle, and in the last decade, with

(34:25):
the proliferation of social media, they tend to have a
lynch mob mentality, says Paul Tudor Jones, whose sixteen billion
dollar macro hedge fund Tutor Investment competed with Besson's key
square for years. So having the smartest person in the
room at the helm is super critical. He's the only
person I know who could do that job for this president.

(34:47):
To Bessant, a believer in laissez faire economics, is axiomatic
that cutting taxes and deregulating industry will juice investment and
job creation. What's taking us past trickle down territory and
into the great is the idea that tariffs will force
companies to reshore production and boost payrolls in the US,
while also generating a steady stream of government revenue. In June,

(35:11):
the US collected twenty six point six billion dollars from
levies on imports, a fourfold increase from the same period
in twenty twenty four. Deportations will reduce the supply of
low cost labour, helping to push up wages. In theory,
this never before tried mix of policies will drive a
big pick up in growth, causing both the deficit and

(35:32):
the federal debt to shrink as a share of GDP,
and with the economy back to health, the dollar stays strong,
queue a new golden age or not. Many economists see
instead a recipe for higher prices and depressed demand. Tariffs,
if applied as inconsistently as they've been so far, create

(35:52):
the kind of uncertainty that holds back investment in hiring.
What if Trump's policies end up saddling the country with
stagflation unmanageable debts and irreversible damage to the environment, a
twenty first century remake of the nineteen seventies. With the
exception of the Liberation Day's spasms, Bessant hasn't yet faced
much market turbulence or anything close to the kinds of

(36:15):
crises his immediate predecessors had to manage. Janet Yellen was
bedeviled by Russia's invasion of Ukraine and the failure of
Silicon Valley Bank Minuti had the pandemic. Bessant also can
count himself lucky, at least in the near term, for
being spared the risk of a federal payments default now
that Republicans have raised the debt ceiling as part of

(36:35):
the One Big, Beautiful Bill Act. Few Treasury secretaries have
become notable figures in history. Hamilton is revered for his
role as a founding father and author of the Federalist Papers.
Albert Gallatin financed the eighteen o three Louisiana Purchase, giving
the U S control of New Orleans and almost doubling
the size of the young country. Salmon Chase introduced the

(36:59):
first non national currency, the greenback. During the Civil War.
Henry Morgenthau Junior helped create the International Monetary Fund and
the World Bank. Bessant is already thinking about his legacy.
Even before his Senate confirmation in late January, he'd made
a list of the things he wanted to accomplish while
in office. It's very easy for the building to run you,

(37:21):
he says. You could be a great manager here and
have good bond auctions and get the tax bill done.
Or you can have bigger goals and leave an imprint.
Reasserting the dollar's supremacy is one of the goals on
Besson's list. So our fixing US bank regulation and ensuring
that economic policy doesn't benefit the financial class while leaving
American workers behind. Bessant smiles. Maybe I'll purchase Greenland, he says,

(37:48):
with Joshua Green and Nancy Cook,