The early reviews for Treasury Secretary nominee Scott Bessent from Wall Street are in — and they’re positive.
But now the hard part begins.
Bessent now faces significant trip-wires in the months ahead due to his challenging job to both calm markets while also selling Trump’s unorthodox plans.
The president-elect highlighted the tricky task on Monday evening when he abruptly announced a 25% tariff “on ALL products” coming from Mexico and Canada as well as new 10% duties on China on his first day in office because of drugs and illegal immigration.
The dual moves, if he follows through once in office, could destabilize importers hoping for a more gradual tariff rollout and Bessent’s task could be heightened by his own recent commentary on tariffs as well as the Federal Reserve.
The ebullience was in part because because Trump, after flirting with more out-of-the-box choices like Howard Lutnick, ended up settling on a known quantity with a long track investing track record in the macro-economic context as his top economic official.
“Trump’s economic team is more pragmatic,” said Eurasia Group president Ian Bremmer in a note Monday morning. “That’s particularly true with Scott Bessent.”
Here are some of the ways his honeymoon could end up tapering off or be short-lived:
Scott Bessent spoke on the economy during a Trump campaign stop in Asheville, N.C. in August. (AP Photo/Matt Kelley, File) ·ASSOCIATED PRESS
One tricky topic will be tariffs.
Bessent made a keen public show, notably via a FoxNews.com op-ed earlier this month, of expressing his fondness for Trump’s tariff plans as he campaigned for the job.
But he also offered some careful caveats to calm wary businesses, which offered a level of contrast to Trump’s often expressed desire for across-the-board duties.
“Used strategically, tariffs can increase revenue to the Treasury, encourage businesses to restore production and reduce our reliance on industrial production from strategic rivals,” he wrote, repeatedly underlining a focus on “strategically important industries.”
In a Yahoo Finance interview earlier this year, Bessent even described Trump’s plans for 60% tariffs on China as a negotiating position, adding, “I would be surprised if we ever hit that.”
Another comment, which Bessent’s critics have circulated in recent days, found him saying “Donald Trump really is a free-trader” and that his goal is for Trump to “save international trade, not [a return to] turn-of-the century tariffs.”
That will, to put it mildly, clearly be a debate within the administration.
Trump often talked during the campaign about how tariffs can be good by themselves to raise revenue and also often pined for 1900-era tariffs imposed during the time of then-President William McKinley.
William McKinley and Donald Trump (McKinley photo: History/Universal Images Group via Getty Images; Trump: Scott Olson/Getty Images)
Bessent may find himself in a debate with Lutnick, whom Trump picked to “lead our Tariff and Trade agenda” as a Commerce secretary nominee. Lutnick was Bessent’s former rival for the Treasury job and has also touted those historic tariffs.
“When was America great?” Lutnick asked the crowd at Madison Square Garden before the election and before discussing the 1890s as an era where “all we had was tariffs” and the economy was “rocking.”
The final call will, of course, belong to Trump.
“The bigger issue is that the main calls on the economy are going to be President Trump’s,” said Jason Furman, a Harvard professor and former chair of Barack Obama’s Council of Economic Adviser, in a Yahoo Finance live appearance on Monday.
Trump “hasn’t given us any signals that he’s given up on large, across the board, tariffs and until I hear that I’m going to be nervous.”
Another past Bessent comment could also be in focus: his idea during the campaign for a “shadow” Fed chair.
He floated the notion in an October Barron’s interview that Trump could essentially make current Fed Chair Jerome Powell a lame duck long before his term ends.
Powell’s full term as a member of the Fed’s board of governors doesn’t end until 2028, but his time atop the Federal Reserve as chair ends sooner, in 2026.
If Trump acted to name a successor early, Bessent argued at the time, “based on the concept of forward guidance, no one is really going to care what Jerome Powell has to say anymore.”
Bessent has reportedly backed away from the idea in private but, on Monday morning, Sen. Elizabeth Warren offered that the central bank could be a key element of potential progressive opposition to Trump’s choice.
“It would be a serious error for the Trump administration to interfere with the Fed’s independence, as Mr. Bessent has suggested,” she wrote in a statement.
Senator Elizabeth Warren, Democrat from Massachusetts, at the US Capitol in Washington on November 14.. (ALLISON ROBBERT/AFP via Getty Images) ·ALLISON ROBBERT via Getty Images
Warren could be sitting across from Bessent multiple times in the coming years as a current member of the Senate Finance Committee, where his confirmation hearing has traditionally taken place, to her likely new perch atop the Senate’s banking committee in 2025.
It’s also an issue that clearly will be closely watched by markets.
“Any action challenging the independence of the Fed are a consistent concern raised in client conversations,” said Raymond James Washington policy analyst Ed Mills in his own Monday note.
Bessent could also face some unrest from the right.
He emerged as Trump’s choice after a bruising selection process that saw some Trump closest allies openly advocate against him. Elon Musk notably called Bessent a “a business-as-usual choice.”
He didn’t mean it as a compliment.
Elon Musk speaks as Howard Lutnick listens at a campaign rally at Madison Square Garden on Oct. 27. (AP Photo/Evan Vucci) ·ASSOCIATED PRESS
Bessent would be part of “the moderate wing of the Cabinet, with support in both parties,” said AGF Investments Chief US Policy Strategist Greg Valliere in a note on Monday.
Indeed, questions about Bessent have burbled on the right ever since he emerged as a frontrunner for the post weeks ago. Much of the MAGA-world concern comes from his previous job as an investing chief for George Soros, a top villain in right-wing circles.
Bessent left Soros Fund Management in 2015 and co-founded his own investment firm, Key Square Group.
And Bessent has been a generous GOP donor in recent years, including more than $3.1 million to Trump and other Republicans during the recent election season according to government records.
But before that he was a giver to both Democrats and Republicans, including to figures like Hillary Clinton, Barack Obama and others.
Another pressure point for Bessent will be fulfilling Trump’s campaign promise of a complete extension of his 2017 tax cuts as well as a dizzying array of additional tax cut promises.
But the path ahead there is far from certain. The federal corporate tax rate could be particularly closely watched by markets and particularly contentious politically.
Trump has promised that the currently 21% rate will drop to 15%. But others in his own party have signaled they might be fine where they are — or even accepting an increase up to 25% if they can pay for other priorities.
Scott Bessent speaks at the National Conservative Conference in Washington in July. (DOMINIC GWINN/Middle East Images/AFP via Getty Images) ·DOMINIC GWINN via Getty Images
The larger issue for Trump and Bessent of getting those tax cut into law could be the $36 trillion national debt and questions about whether any new expensive cuts are even possible.
In a recent episode of Yahoo Finance’s Capitol Gains podcast, Whalen Global Advisors Chairman Chris Whalen was unsparing about the fiscal challenge ahead.
“Trump may not get a chance to do what he wants to do,” he said.
“When the numbers get this big, your choices start to get fewer and fewer.”
Ben Werschkul is Washington correspondent for Yahoo Finance.
Every Friday, Yahoo Finance’s Rachelle Akuffo, Rick Newman, and Ben Werschkul bring you a unique look at how U.S. policy and government affects your bottom line on Capitol Gains. Watch or listen to Capitol Gains on Apple Podcasts, Spotify, or wherever you find your favorite podcasts.
