Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Just coming off that announcement from the President announcing a
Speaker 2: baseline tariff around the United States as well as reciprocal
Speaker 2: tariffs on certain trading partners. I'm joined by Treasury Secretary
Speaker 2: Scott Bessett. Mister Bessett was Starcrati. Thank you so much
Speaker 2: for joining Bloomberg TV. So we're going to have the
Speaker 2: baseline tariffs come into effect perst first, then they're reciprocal
Speaker 2: tariffs a little bit more of a different rate for
Speaker 2: each individual trading partner. Are you preparing to negotiate with
Speaker 2: some of these trading partners before that tariff freight comes
Speaker 2: into effect on April ninth.
Speaker 3: Well, I think there've been a lot of discussions, but
Speaker 3: I think we're just going to have to wait and
Speaker 3: see what would happen. What I would say and Marie
Speaker 3: is I would advise none of the countries to panic.
Speaker 3: I wouldn't try to retaliate, because as long as you
Speaker 3: don't retaliate, this is the high end of the number,
Speaker 3: and I think the market could have certainty that this
Speaker 3: is the number barring retaliation. So we've got a ceiling
Speaker 3: and then we can see if there's a different floor, So.
Speaker 2: You sound like you're ready for a negotiation. A number
Speaker 2: of these partners, has the European Union, has China? Has India?
Speaker 2: Have these countries reached out?
Speaker 3: Well, they've all reached out, But it's going to be
Speaker 3: up to President Trump to see what he wants to do.
Speaker 3: I think the mindset might be to let things settle
Speaker 3: for a while. Their terrafts or non tariff barriers have
Speaker 3: been on a long time, so we'll see where it
Speaker 3: goes from here.
Speaker 2: When it comes to China, they have a much higher
Speaker 2: rate on this list. On top of that, there's still
Speaker 2: that twenty percent fentanyl tariff rate. Is all of this
Speaker 2: coming together to be more than a fifty percent tariff
Speaker 2: rate for Beijing?
Speaker 3: Well, yes, I think it is, and I think it's
Speaker 3: a combination of things. And again that I think China
Speaker 3: said today that solving the fentanyl crisis depends on taking
Speaker 3: off the fentanyl arraffs, and I'm pretty sure that's not
Speaker 3: the way the sequencing is.
Speaker 1: Going to work.
Speaker 3: They're exporting the precursor chemicals and every day, every week,
Speaker 3: every month, Americans are dying and it's going to.
Speaker 1: Have to stop.
Speaker 2: When it comes to places like China. The President has
Speaker 2: mentioned he's willing to even look at things like TikTok
Speaker 2: to potentially do a negotiation. Then, when it comes to tariffs,
Speaker 2: I'm sure you're looking at things like the Yuwan. What's
Speaker 2: on the table when it comes to this trade realignment
Speaker 2: between Beijing and.
Speaker 3: Washington, Well, we haven't started anything yet. We've been busy
Speaker 3: with the tariffs. I've been busy, as we talked about earlier,
Speaker 3: the tax bills going very well.
Speaker 1: So I think that.
Speaker 3: We will move toward the bilateral relationship with China now
Speaker 3: that we've done the multilateral tariffs.
Speaker 2: Plans for conversations or a trip to Beijing. Nothing eminent
Speaker 2: when it comes to this negotiation. April ninth, these tariffs
Speaker 2: come in place. Do you plan on having negotiations before
Speaker 2: that date?
Speaker 3: Again, I'm not part of the negotiation, so we'll see.
Speaker 3: I am sure that they're going to be a lot
Speaker 3: of calls. I just don't know if they're going to
Speaker 3: be negotiations.
Speaker 2: The President had this huge chart showing all of the
Speaker 2: different rates. Canada and Mexico notably missing on that chart.
Speaker 1: Why is that? I'm not sure that sure?
Speaker 2: Okay, I imagine that has to do potentially because they're
Speaker 2: ready in negotiations previously with the twenty five percent. I'm
Speaker 2: not sure if you saw the initial market reaction. I haven't,
Speaker 2: so equity futures slid on the news. You had talked
Speaker 2: about how we're in a detox period. Do you feel
Speaker 2: that we're still in that period or are you starting
Speaker 2: to get a little bit concerned.
Speaker 3: Well, the detox period has nothing to do with the terrorists.
Speaker 3: The detox period is off this incredible level of government
Speaker 3: spending that we've had an unsustainable amount of fiscal stimulus
Speaker 3: and looks that's got to stop.
Speaker 1: That's got to stop.
Speaker 3: So, yeah, can we continue weaning ourselves off of that?
Speaker 3: And as we see private or public sector borrowing go down,
Speaker 3: private sector borrowing go up, public sector jobs come down,
Speaker 3: private sector jobs go up? Is it going to be
Speaker 3: perfectly symmetrical? Note, but we did see an increase of
Speaker 3: ten thousand manufacturing jobs last month, So it.
Speaker 2: Doesn't concern you today that during the tariff announcement, equity
Speaker 2: futures sold off when initially they were rallying when the
Speaker 2: President only announced a ten percent tariff base, and then
Speaker 2: they fell when he announced the higher rates for things
Speaker 2: like the European Union in China.
Speaker 3: Yeah, and Marie, I've learned not to look what goes
Speaker 3: on in after hours markets.
Speaker 2: Okay, but since the peaks in February, stocks are down
Speaker 2: eight percent. I think the NASDAC from it's high most
Speaker 2: recently is down twelve percent so far. Though these kind
Speaker 2: of this kind of market downdraft so far this year
Speaker 2: is not concerning you.
Speaker 3: Well, look in my old business, I was very concerned
Speaker 3: about market movements, and I'm trying to be Secretary of Treasury,
Speaker 3: not a market commentator. What I would point out is
Speaker 3: that especially the NA NASDEK peaked on deep Seak day.
Speaker 3: So that's a mag seven problem, not a MAGA problem.
Speaker 2: Okay, So let's talk about what else you've been spending
Speaker 2: a lot of your time doing. You have been up
Speaker 2: on Capitol Hill constantly. You are really working on trying
Speaker 2: to make sure that this administration can extend the Tax
Speaker 2: cuts and Jobs Act on top of that more tax cuts.
Speaker 2: Right now, How are the conversations going in Congress?
Speaker 3: Well, I actually think the most underreported story in Washington,
Speaker 3: not by Bloomberg of course, is the incredible union enemy
Speaker 3: unity amongst Republicans. And I think it's President Trump's leadership.
Speaker 3: But Mike Johnson, with a very narrow margin, issued the
Speaker 3: reconciliation instructions and then he also passed a clean continuing resolution.
Speaker 3: On the Senate side, they are variant, attentive, and I
Speaker 3: think they may have something done by this Saturday.
Speaker 2: This Saturday, Okay, that's the start of it, though, that's
Speaker 2: the start. You recently talked about how you think it's
Speaker 2: not just going to be tax on tips that gets
Speaker 2: no tax on tips that gets added to this bill.
Speaker 2: You think reconciliation can include a plethora of what the
Speaker 2: President has talked about, no tax on tips, no tax
Speaker 2: on Social Security. Also recently talking about rebates if you
Speaker 2: buy an American car, how do you get all of
Speaker 2: this done?
Speaker 3: Deductibility of interest if you buy an American car, which
Speaker 3: I'm older than you are, but when I bought my
Speaker 3: first car, the interest was deductible, but now it's got
Speaker 3: to be only on American cars.
Speaker 2: So how do you do all this at the same
Speaker 2: time that market participants, budget fiscal hawks, budget hawks in
Speaker 2: Congress are concerned about the deficit. How are you going
Speaker 2: to have this big reconciliation package?
Speaker 3: Well, I think as we've seen there's a lot of
Speaker 3: room to cut spending. So I think again where Republicans
Speaker 3: have incredible unity is on the spending cuts as we're seeing.
Speaker 2: So when it comes to the timeline of all of this,
Speaker 2: I do notice that now reconciliation, it seems to be
Speaker 2: an agreement between the House and the Senate that they're
Speaker 2: willing to consider about raising the debt ceiling. So do
Speaker 2: you plan on getting this bill done before the X state,
Speaker 2: which the CBO is saying could be the middle of
Speaker 2: the summer or September.
Speaker 3: Well, and Marie, I think you just answered the question
Speaker 3: for yourself, because if debt ceiling is solved via reconciliation,
Speaker 3: then it has to be done before we hit the
Speaker 3: X state, and we're going to go onto the warning
Speaker 3: track sometime in May or June.
Speaker 2: So that's when you plan to get this tax bill done.
Speaker 1: That's a goal.
Speaker 2: So if we could put all both these stories together. Today,
Speaker 2: the Presidence comes out with tariffs you're working on the
Speaker 2: tax plan. He talks about tariffs being revenue raisers to
Speaker 2: offset the tax bill you're working on. At the same time,
Speaker 2: you and the President also talk about a negotiation you're
Speaker 2: willing to do to get recied Prossy becomes to other
Speaker 2: trading partners. How can it be both revenue raising and
Speaker 2: a negotiation.
Speaker 3: Well, to the extent that the tariffs are higher than
Speaker 3: what we had, it will raise revenues. And you know,
Speaker 3: as far as the negotiations will see and I could
Speaker 3: tell you though, it's not going to be possible to
Speaker 3: include the terriffs in the CBO scoring, So that will
Speaker 3: be something running in the background. And as the President said,
Speaker 3: we've taken in several hundred billion dollars on the China tariffs,
Speaker 3: but those those don't get scored.
Speaker 2: Do you feel that you need to have enough revenue
Speaker 2: raised from these arffs before this reconciliation package comes to
Speaker 2: play in Congress?
Speaker 3: Well, I don't think we have to have the revenue raise.
Speaker 3: And look, you know we're doing two things. Tariffs are
Speaker 3: going to raise revenues and then we're also the stamping
Speaker 3: out waste for an abuse in the government and bringing
Speaker 3: down the expenses and spending. And we're not going to
Speaker 3: get credit for either of those with the CBO scoring.
Speaker 3: So when your audience, when American people see these CBO scores,
Speaker 3: there could be the large but there is a substantial
Speaker 3: amount of tariff income, there's a substantial amount of savings.
Speaker 2: While all this is happening, consumer sentiment has definitely taken
Speaker 2: a bit of a dive. Expectations for inflation have gone up.
Speaker 2: Banks like Goldman are cutting their GDP forecast saying potentially
Speaker 2: the Fed is going to have to cut rates, not
Speaker 2: the good kind of cuts, the kind of cuts because
Speaker 2: they're nervous about growth. How concerned are you that the
Speaker 2: timing of all this is going to be incredibly challenging
Speaker 2: because of how the American consumer, how corporate America is
Speaker 2: feeling at this moment.
Speaker 1: Well, it tells me a couple of things.
Speaker 3: One, we got to get the tax build done quickly,
Speaker 3: so because that's a componence builder. And two, we're seeing
Speaker 3: ciniment surveys from the American people, but we haven't actually
Speaker 3: seen them take action.
Speaker 1: If the households actually thought that.
Speaker 3: There were going to be employee if their real inflation
Speaker 3: expectations had increased, what would they be doing. They'd be
Speaker 3: hoarding goods and they would be demanding wage increases, and
Speaker 3: neither one of those has happened yet.
Speaker 2: So at the moment, you're not concerned about some of
Speaker 2: the soft data we're seeing.
Speaker 1: No, I see nothing.
Speaker 3: And one of the great things, many great things about
Speaker 3: being a Treasury is we have lots of business people
Speaker 3: come through and everything we're seeing in the economy is
Speaker 3: still very.
Speaker 2: Solid, and executives haven't voiced any of these concerns onto you.
Speaker 3: No, there's some idiosyncratic things, but in terms of the
Speaker 3: expectations actually turning into hard data, none of them.
Speaker 1: Messina jet.
Speaker 2: Now that you're working on the tax bill, and of
Speaker 2: course tariffs at the moment are out of the way.
Speaker 2: What else is on the agenda for you for the rest.
Speaker 1: Of the year.
Speaker 3: Well, that we have the Ukraine deal that's coming up.
Speaker 3: We've gone to maximum pressure on Iran. A big part
Speaker 3: of Treasury is national security, and then we are doing
Speaker 3: a big push on deregulating in a smart, safe and
Speaker 3: sound way the regulated financial institutions, which is going to
Speaker 3: allow for the private sector, not the government sector, to grow.
Speaker 2: When it comes to international where are you with a
Speaker 2: Ukraine and the mineral deal.
Speaker 1: I believe we.
Speaker 3: May have a team from Ukraine coming over as soon
Speaker 3: as the end of this week or the beginning of
Speaker 3: next week. Ukrainians have I believe that they've hired council,
Speaker 3: And what we did was after the incident in the
Speaker 3: White House on I believe it was February twenty eighth,
Speaker 3: we're going to sign a four page deal that with
Speaker 3: parameters of understanding, and at Treasury we took the opportunity
Speaker 3: to move forward to.
Speaker 1: The big deal.
Speaker 3: So this is the exact same deal that would have
Speaker 3: resulted from the four page signature signature deal.
Speaker 1: So we've just fast forwarded.
Speaker 3: And we didn't want to lose any time because we
Speaker 3: believe this deal is so important for the American people,
Speaker 3: for the Ukrainian people, and for the peace process.
Speaker 2: So it sounds like in the next two weeks you're
Speaker 2: going to have this deal over the finish line.
Speaker 1: It's ready on our side.
Speaker 2: When it comes to Iran, since you mentioned that, and
Speaker 2: I know you're going to be focused a lot on
Speaker 2: international aspects now the tariffs are done and you have
Speaker 2: the tax deals underway. When it comes to Iran, do
Speaker 2: you think we could see secondary tariff secondary sanctions, Well.
Speaker 3: We've already seen sanctions. For the first time. US Treasury
Speaker 3: sanctioned a so called teapot refinery, which is a private
Speaker 3: sector refinery in China and they are the buyers of
Speaker 3: the Iranian oil and we could see more of that. Wow.
Speaker 2: Interesting Church of Secretary Scotts Bessett. You've been very generous
Speaker 2: at your time today. We really appreciate it here at
Speaker 2: Bloomberg TV. Thank you so much. Good to see you.