Treasury Secretary Scott Bessent discussed the President's policies with Larry Kudlow at The Economic Club of New York event on March 6, 2025.
I know that President Trump believes that one of the reasons that the 2018 midterms were unsuccessful was that it was an amazing tax bill you [Kudlow] put together, but that it wasn’t the focus in the first half of the year.
In terms of tariff policy, I think one thing that has become clear to me over the past decade is Ricardian equivalence does not work if other countries have a very different economic and social policy. [China and US] are like California and Texas.
The only good thing that I could say about COVID was it was a beta test for what we could have if we had a large scale economic disturbance or a hot war, and it showed us that optimal supply chains are not secure. I think it has made us refocus on many of the aspects.
When you see President Trump talking about the rarer strategic minerals, reshoring our medicines, reshoring the semiconductors, all of that is from the lessons we learned during COVID of not having reliable trading partners.
[I]f you can change the growth trajectory, then we can grow our way out of this debt.... I do think we are taking this seriously...So if we could get above 3 percent, if we could hold expenses in line, flat, or even if we could do the unthinkable, if we think about a kind of a naive reductionist model of government, G equals S minus T, spending minus taxes, Republicans, we like more spending, but we just want to do it slower.
"The president has already begun a campaign to rebalance the international economic system. Perhaps we are seeing an early big win with Germany's discussions to dramatically boost its military spending.
“The international trading system consists of a web of relationships, military, economic, political. One cannot take a single aspect in isolation. This is how President Trump sees the world, not as a zero-sum game, but as inter linkages that can be reordered to advance the interest of the American people.
“This is contrary to the last several decades, when other countries acted to advance their own interest, while our policymakers largely forgot about the tradeoffs of unconstrained trade misalignment. The result was the United States provided a source of massive demand, acted as arbiter of global peace, but did not receive adequate compensation for today, the United States finds itself subsidizing the rest of the world’s under-spending in defense. This is not just a security issue.
“Access to cheap goods is not the essence of the American dream. The American dream is rooted in the concept that any citizen can achieve prosperity, upward mobility, and economic security.
“This is the America first trade policy. We are identifying bad actors across a range of criteria, not just tariffs applied to our exports, but also non-tariff barriers, laws which unfairly apply fines to our exporters, government policies which undercut global competition and suppress wages and currency manipulation that enables persistent trade surpluses.
“These are not the only metrics in which our global trading partners should be scored. That is increased burden sharing on security is critical amongst friendly nations. No longer should American tax dollars, American military equipment, and in some cases, American lives, be the sole bearers of upholding friendly trade and mutual security. Burden sharing is not a matter of offloading risk, but a matter of all benefiting parties having interest in the system
"In his ECNY speech last September, President Trump expressed his view that overuse of sanctions could affect the US dollar supremacy. I couldn't agree more and would add that, not unlike the overuse of antibiotics, the target becomes immune and mutates.
“Lackadaisical sanctions simply create new markets, which must then be sanctioned and so on. A major factor that has enabled the Russian war machines continued financing was the Biden administration's egregiously weak sanctions on Russian energy stemming from worries about upward pressure on us energy prices during an election season.
“This administration has kept the enhanced sanctions in place and will not hesitate to go all in should it provide leverage in peace negotiations. Per President Trump's guidance, sanctions will be used explicitly and aggressively for immediate maximum impact. They will be carefully monitored to ensure that they are achieving specific objectives.
"I know a few things about currency devaluations, and if I were an Iranian, I would get all my money out of the rial now. We will close off Iran's access to the international financial system by targeting regional parties that facilitate the transfer of its revenues. Treasury is prepared to engage in frank discussions with these countries, we are going to shut down Iran's oil sector and drone manufacturing capabilities.
"Making Iran broke again will mark the beginning of our updated sanctions policy, Watch this space. If economic security is national security, the regime in Tehran will have neither."
Official Transcript
Treasury Secretary Scott Bessent Remarks at the Economic Club of New York
Comments
No comments on this item Please log in to comment by clicking here