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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: I'm pleased to be with Treasury Secretary Scott Bessett this time.

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Speaker 2: You're back on Bloomberg in Argentina. Thanks for joining us again.

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Speaker 1: Good good to be with you, Good to be in

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Speaker 1: Buenos Aires.

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Speaker 2: Yeah, it's fantastic here. So you've come here at a

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Speaker 2: time when the IMF has just announced this twenty billion

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Speaker 2: dollar agreement with Argentina. But we haven't seen a Treasury

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Speaker 2: secretary come to Argentina since Trump's first administration, and that

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Speaker 2: was for G twenty. So why the emphasis from the

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Speaker 2: Trump administration on Argentina.

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Speaker 3: Well, and Marie, a couple of reasons. The reason for

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Speaker 3: being here today is today's a Fulcrum day. So the

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Speaker 3: Melee administration has done three adjustments and this marks the

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Speaker 3: beginning of the third one. So they did a large

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Speaker 3: fiscal adjustment, a large monetary adjustment, and they're doing or

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Speaker 3: they announced on Friday, or large currency adjustment has allocated

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Speaker 3: twenty billion to them. The World Bank has allocated twelve billion.

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Speaker 3: And I wanted to come here today to show support

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Speaker 3: for President Melee and his commitment.

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Speaker 1: Two.

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Speaker 3: What I think is historic in terms of bringing Argentina

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Speaker 3: back from the precipice.

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Speaker 2: When it comes to the trade negotiations, I'm sure you

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Speaker 2: spoke with President Milay about the ten percent rate that

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Speaker 2: Argentina was hit with. Do you think at some point

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Speaker 2: that can come down to zero?

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Speaker 3: Look, I think we're going to start the negotiations and

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Speaker 3: just like with everyone else, I'm telling them, bring your

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Speaker 3: a game, we'll see what you got and we'll go

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Speaker 3: from there.

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Speaker 2: Can any country go to zero again?

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Speaker 1: We'll see.

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Speaker 3: Is I don't know what's going to happen with the

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Speaker 3: negotiations because we've got a whole box of things. We've

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Speaker 3: got to overcome tariff, non tariff trade barriers, currency manipulation,

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Speaker 3: and sub subsidization of labor and facilities. So there's a

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Speaker 3: big menu there.

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Speaker 2: There's been an early focus on Latin America writ large

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Speaker 2: from the Trump administration in the first one hundred days.

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Speaker 2: Is Latin America policy also in a sense China policy

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Speaker 2: for this administration.

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Speaker 3: Well, I think that might be a good description because

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Speaker 3: what we are trying to keep from happening is what

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Speaker 3: has happened on the African content where China has signed

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Speaker 3: a number of these rapacious deals marked as AID, where

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Speaker 3: they are really they've taken mineral rights. They've added huge

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Speaker 3: amounts of debts onto these countries' balance sheets. It's undisclosed

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Speaker 3: to any of the other international organizations. They've got tolling arrangements,

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Speaker 3: so they're guaranteeing that future generations are going to be

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Speaker 3: the poor and without resources, and we don't want that

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Speaker 3: to happen any more than already has a Latin America.

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Speaker 2: China has a foreign exchange swap with Argentina. Would you

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Speaker 2: consider a credit line directly from the United States.

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Speaker 3: That's not under consideration in terms of so they have

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Speaker 3: an eighteen billion dollar credit swap in r and b

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Speaker 3: Argentina under the previous peronas government drew down five billion,

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Speaker 3: and that will remain outstanding. The Chinese showed very good

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Speaker 3: faith effort after the announcement or in conjunction with the

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Speaker 3: IMF announcement, so that is going to be rolled forward

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Speaker 3: for a year.

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Speaker 2: But do you want them to get rid of that

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Speaker 2: swap with Beijing?

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Speaker 3: Well, I think as this administration continues stay the course

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Speaker 3: of their economic policies, they should eventually have enough foreign

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Speaker 3: exchange inflows to be able to pay that off.

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Speaker 2: So less than two weeks ago, you and I were

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Speaker 2: talking outside of the White House after what President called

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Speaker 2: Liberation Day, and you said you weren't part of the negotiations.

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Speaker 2: Now you're leading them. What's changed in these past twelve days.

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Speaker 1: No, no, no, no.

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Speaker 3: What I said was I didn't construct the actual rate,

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Speaker 3: the teriff rates. I've always been part of the tariff policy.

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Speaker 3: I had been focusing on tax maybe I want to

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Speaker 3: talk about that later. That's going very well, and now

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Speaker 3: with the trade negotiations, I'm going to be part of that.

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Speaker 3: And the President has hit a ninety day pause button,

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Speaker 3: and we are moving quickly with many of our most

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Speaker 3: important trading partners. So we had Vietnam in last week,

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Speaker 3: we have Japanese in on Wednesday, South Korea next week,

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Speaker 3: so it's.

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Speaker 1: Going to move fast.

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Speaker 3: But the important thing for your viewers to know is

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Speaker 3: we're sending up a process and we are going to

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Speaker 3: run that process. It's going to be orderly and at

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Speaker 3: the end of the day, especially for the most important

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Speaker 3: trading partners, the President's going to be involved.

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Speaker 2: So when it comes to the current negotiations this week,

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Speaker 2: you're also sitting down again with the Spanish negotiating team.

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Speaker 2: This excuse me, the Japanese negotiating team and also the

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Speaker 2: Spanish economy minister.

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Speaker 3: Well, the Spanish economics minister was just a pre arranged meeting.

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Speaker 3: He and I have never met, so that is not

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Speaker 3: a trade sit down. The Japanese meeting is a trade negotiation.

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Speaker 2: The Japanese Prime Minister recently said he's not going to

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Speaker 2: rush to get a compromise in a negotiation. How quickly

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Speaker 2: do you think you can see these deals come to fruition?

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Speaker 3: Well, again, I think there will be advantage to our allies,

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Speaker 3: especially in a first mover advantage. You usually the first

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Speaker 3: person that makes the deal gets the best deal.

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Speaker 1: So if you think will be first, it's their choice.

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Speaker 2: Is there a handful of countries that you expect to

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Speaker 2: have a deal before the ninety days is up.

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Speaker 3: Oh, I think there could be numerous countries, and it

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Speaker 3: may not be the actual trade document, but we will

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Speaker 3: have an agreement in principle and be able to move

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Speaker 3: forward from there.

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Speaker 2: So we're talking about a dozen or seventy plus.

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Speaker 1: I think it's going to depend.

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Speaker 3: But we're going to move with all deliberate speed, and

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Speaker 3: again it's going to be a process. It's going to

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Speaker 3: be USTR, who just has mountains of data that they've

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Speaker 3: been collecting over the years. Because, in a funny way,

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Speaker 3: the terriffs are the easiest part. So a country with

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Speaker 3: high tariffs you can just say, okay, this this, get

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Speaker 3: rid of it. It's the non tariff trade barriers that

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Speaker 3: are more insidious, more difficult spot and it's probably going

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Speaker 3: to take a little longer to exercise those demons.

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Speaker 2: When you said you weren't part of the rates in

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Speaker 2: that chart that the President held in the Rose Garden,

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Speaker 2: is he taking a maximist approach? Neil Dutterer recently wrote

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Speaker 2: that President Donald Trump has cracked a lot of eggs,

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Speaker 2: and now Scott Bessett's treasure secretary needs to make an omelet.

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Speaker 2: Is that how you view this situation right now?

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Speaker 3: I view not giving away negotiating secrets on worldwide television

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Speaker 3: as the essence of negotiating.

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Speaker 2: You recently talked about getting deals done quickly with partners

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Speaker 2: to then confront China together. When you're in these negotiations

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Speaker 2: with trading partners, are you looking for them to offer

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Speaker 2: up something to combat Beijing?

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Speaker 3: Well, I think combats an aggressive word. But look, I

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Speaker 3: think now that we have had the China terriffs in place,

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Speaker 3: that they are going to want to have some protection

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Speaker 3: from Chinese goods flooding their markets. That China's business model

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Speaker 3: is like from that Disney movie where the brooms are

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Speaker 3: carrying the buckets, like they're not going to stop manufacturing

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Speaker 3: because the US.

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Speaker 1: Has a terriff wall up. So those goods are going

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Speaker 1: to go somewhere.

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Speaker 2: Where do you think they're going to dump?

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Speaker 1: Well, I think it depends on the good.

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Speaker 2: We have exemptions now though for electronics, so we still

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Speaker 2: expect electronics to come into the United States with the

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Speaker 2: smaller tariff rate, the fetanyl twenty percent.

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Speaker 1: But you were asking where are they going to dump?

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Speaker 3: I think it will depend on what is the good,

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Speaker 3: higher value added manufacturing goods, likely the Europe, Canada in

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Speaker 3: the G seven and then kind of more the bobbles

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Speaker 3: and knickknacks in the Global South.

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Speaker 2: China's Commerce ministry came out when the tarff rates were

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Speaker 2: going above one hundred percent and called it, quote a joke.

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Speaker 2: Has there been negotiations on any level between Beijing and

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Speaker 2: Washington right now?

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Speaker 3: Well, look it'll come from the top. President Trump, Chairman

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Speaker 3: Shee have a very good relationship and I wouldn't say

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Speaker 3: that these are not a joke.

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Speaker 1: I mean, these are big numbers.

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Speaker 3: I think no one thinks they're sustainable, wants them to

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Speaker 3: remain here.

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Speaker 1: But it's far from a joke.

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Speaker 2: Well they just say that the rate is so high

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Speaker 2: it's become a joke. Basically. Does it just stop trade

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Speaker 2: between Washington and Beijing altogether? Do you see a decoupling

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Speaker 2: of these two economies?

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Speaker 3: Well, maybe the trade minister has a different sense of humor.

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Speaker 3: I do, but I don't see anything funny about it.

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Speaker 2: Do you see a decoupling though, between Washington and Beijing?

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Speaker 1: There doesn't have to be. There could be.

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Speaker 3: There's a big deal to be done at some point.

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Speaker 3: But look what is different with China that is different

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Speaker 3: in the history of trade that normally, if you go

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Speaker 3: back to the big trade deals or the currency deals

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Speaker 3: in the eighties Applausa Acord, Louver Accord, the Reagan Auto deals,

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Speaker 3: our leading economic competitors were our military allies. China is

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Speaker 3: both our biggest economic competitor and our biggest military rival.

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Speaker 3: So that's going to require a special kind of formula.

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Speaker 2: Are you teasing out a Mara Alago accord that we

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Speaker 2: should be paying attention for in the future.

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Speaker 1: I'm not sure what you're talking about.

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Speaker 2: Oh, potentially getting all these trading partners together to discuss

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Speaker 2: fair balance trade.

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Speaker 1: Well, we're doing that over the next ninety days.

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Speaker 2: Okay. So shifts in tariff policies has had markets on edge.

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Speaker 2: Even the President recently remarked the bond market was quote queasy.

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Speaker 2: Do you have a sense of who is dumping US assets?

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Speaker 2: Who's been dumping US treasuries.

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Speaker 1: I don't think there's a dumping.

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Speaker 3: And I think we saw in the TIC data either

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Speaker 3: today or Friday that actually foreign ownerships picked up.

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Speaker 1: We had two, we had three big.

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Speaker 3: Auctions last week, and on the longer end auction ten year,

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Speaker 3: thirty year, we saw increase foreign competition. So I actually

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Speaker 3: think this is one of those occasional varshocks that you

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Speaker 3: get in the trading community. I think a lot of

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Speaker 3: people got very leverage, maybe out over their skis, and

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Speaker 3: then you combine that with some real money selling and

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Speaker 3: you get these moves.

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Speaker 2: So you don't think it's sovereigns. Potentially it's hedge funds unwinding.

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Speaker 1: I have no evidence that it's sovereigns.

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Speaker 3: And look emery not you, but The nature of journalism

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Speaker 3: is to create a headline that ten days ago when

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Speaker 3: tenure yields hit three ninety said, well, Secretary Besson got

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Speaker 3: what he wanted, he got ten year yields down.

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Speaker 1: But it's the wrong reason.

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Speaker 3: Now, I forget what they hit on Friday, maybe for

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Speaker 3: forty something.

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Speaker 1: We saw a.

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Speaker 2: Fifty basis move last week and ten year yield at

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Speaker 2: the same time the dollar was weakening nearly three percent.

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Speaker 2: How do you simultaneously look at that situation. It feels

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Speaker 2: like investors are dumping US assets.

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Speaker 3: Well, look, I've learned that not to look at what

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Speaker 3: happens the over a week. I, for better or worse,

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Speaker 3: have lived through a lot of these things in trading.

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Speaker 3: In one's personal trading history is the scar tissue that

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Speaker 3: sticks with you the most. I can tell you exactly

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Speaker 3: where I was standing in nineteen ninety eight when the

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Speaker 3: long term capital the bacle happened. That had nothing to

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Speaker 3: do with anything other than a bunch of geniuses up

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Speaker 3: in Greenwich who had too much leverage.

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Speaker 2: So you're not concerned at this moment about the US

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Speaker 2: dollar or the US Treasury losing safe haven asset. No,

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Speaker 2: we're still a.

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Speaker 3: Global reserve card, we are still a global reserve currency

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Speaker 3: that we have a strong dollar policy.

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Speaker 1: The dollar can go up and down to go and look.

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Speaker 3: Back at President Trump's first term, I don't remember the

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Speaker 3: exact number, but the dollar in twenty seventeen went down,

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Speaker 3: I can't remember seven eight nine percent, and then once

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Speaker 3: the tax bill was done, took off, took off the

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Speaker 3: remainder of his term.

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Speaker 2: Have you spoken to the Fed at all about contingency

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Speaker 2: plans though? If financial stability risks flare up.

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Speaker 3: Chair Powell and I have breakfast every week and we

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Speaker 3: discuss a wide range of things, and you know, our

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Speaker 3: staffs are always in contact. We have a market's room,

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Speaker 3: they have a market's room. But specifically, did we discuss

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Speaker 3: some kind of a break the glass? I think we're

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Speaker 3: a long way from that.

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Speaker 2: So when was the last time you guys spoke? We

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Speaker 2: had breakfast last week?

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Speaker 3: We had breakfast last week and it wasn't away game.

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Speaker 1: I was over at the Fed and.

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Speaker 2: No concern so far from the Fed chair and what

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Speaker 2: he saw on the treasury market.

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Speaker 1: I think we would have heard from the Fed chair.

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Speaker 3: I think we heard from Governor Collins of Boston on Friday.

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Speaker 3: We heard from Governor Weller today on his thoughts on

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Speaker 3: what terrists mean so seems like businesses.

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Speaker 2: When it comes to the FED chair, his term is

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Speaker 2: up May twenty twenty six, so we're almost twelve months

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Speaker 2: out from that. When are you going to start to

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Speaker 2: think about have these discussions with the president about who

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Speaker 2: should lead the FED?

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Speaker 1: Well, we think about it all the time.

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Speaker 3: I think, when are we going to start the interviewing candidates?

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Speaker 1: And that'll be some time in the fall.

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Speaker 2: In the fall, so about six months lead time. The

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Speaker 2: US Supreme Court recently came out with the ruling that

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Speaker 2: the executive branch, the president for now could oust top

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Speaker 2: officials at independent agencies, and that has some individuals in

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Speaker 2: the market a little bit concerned about what this could

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Speaker 2: mean for the independence of the FED, which is really

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Speaker 2: a cherished pillar of wanting to invest in America. Do

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Speaker 2: you have any concern about potentially President Trump ousting FED

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Speaker 2: Chair J Powell or the independence of the Fed?

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Speaker 1: Well and Marie, I've.

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Speaker 3: Repeatedly said that the FED has two duties, and I

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Speaker 3: believe that monetary policy is a jewel box that's got

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Speaker 3: to be preserved, and then they have regulatory policies, and

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Speaker 3: I think we can have more of a discussion because

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Speaker 3: the FED is one among three bank regulators, and there's

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Speaker 3: the FED Controller of the currency and the FDICE. So

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Speaker 3: I think it's very easy to delineate between those two.

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Speaker 2: So at the moment, no concern, no concern. When you

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Speaker 2: talk to FED Chair j Palet, at the moment, doesn't

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Speaker 2: sound like they feel like they need to step in

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Speaker 2: on this unraveling we saw last week with the bond market.

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Speaker 2: Does the Treasury have any plans to do something if

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Speaker 2: this was to become more unnerving?

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Speaker 3: Well, look, the Treasury has lots of things we can do,

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Speaker 3: but again I think we're a long way.

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Speaker 2: From that, but all options would be on the table.

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Speaker 3: Sure, But again we have a big toolkit that we

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Speaker 3: can roll out. We do regular off the run buybacks.

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Speaker 3: We could up the buybacks if we wanted.

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Speaker 2: So just finally, I want to get your thoughts on

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Speaker 2: something you told me John and lisaon February, which was

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Speaker 2: that in your old world, you would be that person

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Speaker 2: with your ear against the door trying to understand what

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Speaker 2: policy makers were doing, so then you could predict where

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Speaker 2: financial markets would go in this moment where we hear

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Speaker 2: from top executives constantly. Today it was the Goldman Sachs CEO.

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Speaker 2: Last week it was JB. Diamond, And there uncertainty, especially

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Speaker 2: around tariff policy. What advice would you be giving to

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Speaker 2: your old self.

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Speaker 3: To look at the whole policy, because again, not you,

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Speaker 3: but others in the media can pick one factor. So

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Speaker 3: right now it's tariff tariff, tariff, But have you mentioned

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Speaker 3: we have tax tax tax coming up, We have deregulation

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Speaker 3: to regulation to regulation, so it's a mini the leg stool,

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Speaker 3: and I would try to think about what's happening. The

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Speaker 3: tariff sequencing was always going to be first, the tax

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Speaker 3: bills going very well, and I think I've been pleasantly

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Speaker 3: surprised at how quickly that's moving along. And then deregulation

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Speaker 3: from our area on the financial side and in the

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Speaker 3: rest of the economy that takes a little longer, but

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Speaker 3: that will start kicking in September, October in the fall,

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Speaker 3: and those are going to be very powerful.

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Speaker 2: I believe you described as a three leg tool, and

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Speaker 2: right now everyone is focused on one part of that leg,

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Speaker 2: and that's the tariffs. As you say, when it comes

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Speaker 2: to the tax cuts, right now, what the market is

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Speaker 2: expecting and what could get done in Congress based on

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Speaker 2: how slim the majority is for the Republicans is just

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Speaker 2: an extension of current policy.

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Speaker 1: I think that's wrong.

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Speaker 3: I think that the underreported story in the media, the

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Speaker 3: story this funder report doesn't get reported enough, is a

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Speaker 3: democratic chaos, but that the underreported story is the remarkable

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Speaker 3: Republican unity led by President Trump. Speaker Johnson first try

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Speaker 3: got it instructs out of the House for the budget.

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Speaker 3: He passed a clean CR first try. Senator or Leader

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Speaker 3: Thoone pinged it back to the House very quickly with

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Speaker 3: their instructions. And I had something along with Kevin Hassett

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Speaker 3: had in a c chair called the Big Six, which

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Speaker 3: also includes Leader Throone, Speaker Johnson, Senator Crapo, Committee Chair

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Speaker 3: Jason Smith. And everyone's very aligned. And there's going to

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Speaker 3: be a lot more bells and whistles other than in

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Speaker 3: tc other than just changing the date on TCJA.

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Speaker 2: So your pitch right now to financial market participants to

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Speaker 2: consumers is you need to see the entire picture.

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Speaker 3: Well, you need to see the entire picture. And as

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Speaker 3: President Trump said the other day, stay cool. It was

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Speaker 3: my message when I was out with you. You on April. Second,

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Speaker 3: it was to the countries. These are maximum rates, So

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Speaker 3: you ask if it was a Maximus strategy. If you

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Speaker 3: don't elevate, this is your maximum rate. So don't elevate.

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Speaker 1: You have in.

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Speaker 3: Markets the upside barrier, you don't have unlimited risk, and

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Speaker 3: then come to us and we will negotiate.

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Speaker 1: In good faith.

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Speaker 2: Can you guarantee clarity in ninety days.

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Speaker 3: I think clarity is through the eye of the beholder.

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Speaker 3: But I can guarantee you that we're going to run

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Speaker 3: a robust process, and I think the market can take

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Speaker 3: great comfort in that.

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Speaker 2: So maybe some of that uncertainty starting to evaporate.

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Speaker 3: Yeah, if we measure uncertainty by the VIS I think

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Speaker 3: that the VIX. I don't want to make market calls,

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Speaker 3: but I think that the VIC spiked and is likely peaked.

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Speaker 2: Secretary Bessant, we really appreciate your time. Of course, that

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Speaker 2: was Scott Bessant, the US Treasury Secretary here in Buenos Aires,

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Speaker 2: and his pitch to the world. It's a three legged stool.

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Speaker 2: In terms of Trump administration's policy proposals. Right now, the

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Speaker 2: market squarely focused on tariffs,