Bessent Advisor Says Tariffs Could Bring in $300 Billion

Watch Bessent Advisor Says Tariffs Could Bring in $300 Billion - Bloomberg on Dailymotion

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00:00When I speak to individuals that are sitting on the other side of the U.S. trade representative

00:05or Treasury Secretary Scott Besson, they say that they have been told and given assurances

00:10by this administration that if they are in good faith negotiations, that that deadline

00:15can be pushed back. Is that your understanding? Well, that's what Secretary Besson has said,

00:20and Secretary Lutnik recently said about 10 to 12 countries are very close to a deal.

00:26There's about another 20 that are also negotiating good faith, and Secretary Besson recently

00:30highlighted that many deals could be done by Labor Day. So there's a lot of good progress.

00:34But on the tariffs, I just want to be clear, the consensus view among almost everybody was

00:39that tariffs would start to impact the data in March. It didn't happen in March, it didn't

00:43happen in April, it didn't happen in May, and we know there's a big number associated with

00:48the revenue. We could have $300 billion of tariff revenue this year that's coming in.

00:54So we've got this huge increase in revenue. So they're there. And the reason the tariffs

00:58are impacting things in large part is because foreign producers, as we learned from the first

01:04Trump administration, are absorbing it in their margin.

01:07When it comes to Japan specifically, the president said that they're spoiled. And he talked about

01:11the fact that maybe he's going to go for 30, 35 percent rate. On a Liberation Day, they

01:16only had a 24 percent rate. Do you see any country going above April 2nd rates?

01:24The president is a very tough negotiator, and I'm confident that whatever winds up happening

01:30with Japan and everyone else is going to be in the U.S. best interest. This is a negotiation.

01:36And again, as Secretary Besson's highlighted many times, as long as countries are negotiating in good

01:40faith, that's a positive. And then we take it from there. But I do expect, as the Secretary said,

01:45there are deals forthcoming.

01:47The market response to all of this has been pretty much a shrug. We've seen new record highs

01:52for equity markets, except the dollar has continued to weaken and weaken to some of the lowest levels,

01:57weakest levels going back to 2022. At what point is that a concern for you?

02:02Lisa, first of all, a lot of that weakness is vis-a-vis the euro. If you look at the Fed's

02:09real broad trade-weighted index, which is about 26 countries, as opposed to, I believe,

02:14the Bloomberg DXY, I think it's only six or seven. It's a small sample. If you look at the real

02:19broad trade-weighted index, it's close to one of the highest readings we've had since the Plaza

02:25Accord back in 1985. So this notion that somehow there's a selling of U.S. assets, that the dollars

02:32weak. Some major financial outlets have talked about that. It's completely incorrect. It's not

02:36consistent with the tick data. It's not inconsistent with the recent BIS report, which talked about

02:43some of the selling of assets in April. That brief period of selling was actually due to hedging.

02:49It wasn't due to lack of demand for U.S. assets. So the dollar is the reserve currency. The dollar

02:54will be strong. The dollar is still strong. And I think those concerns are greatly misplaced.