Bessent Has Trump's Ear, Investors Hope That Continues

Erik Schatzker, editorial director for Bloomberg News, discusses his 'Big Take' story on Scott Bessent, his path to become US Treasury Secretary and what he has accomplished under the Trump Administration.

On April 6, the Sunday after Donald Trump unveiled his “Liberation Day” tariffs, Treasury Secretary Scott Bessent joined the president on a flight back to Washington from Mar-a-Lago. Bessent wanted to talk about damage control. By then the image of Trump in the Rose Garden waving placards displaying import duties as high as 49% had spooked investors around the world, triggering the biggest two-day selloff in stocks since the pandemic. “We are in the process of destroying confidence in our country as a trading partner, as a place to do business, and as a market to invest capital,” billionaire investor Bill Ackman wrote in a post on X, warning of a coming “economic nuclear winter.” JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon chimed in, saying the tariffs were likely to reignite inflation and possibly induce a recession. Larry Summers, a former Treasury secretary, predicted the US would suffer job losses in the millions.

Bessent, formerly one of the world’s top hedge fund managers, had told his clients only months earlier that under Trump the “tariff gun will always be loaded and on the table but rarely discharged.” In Wall Street’s eyes he was supposed to be the safety catch. So where was he?

After a 40-year career in finance that involved working for investing legends such as George Soros and Stanley Druckenmiller, Bessent has his own ideas about how to soothe panicky traders. “I think I could have made the markets go up on Liberation Day,” he says in a late-July interview in his office at the Treasury Department. “If we had said, ‘Here are the numbers. These are the maximum tariff levels if you don’t retaliate, but we’re open for negotiation.’”

On Air Force One that Sunday in April, Bessent says, he proposed an immediate tariff pullback to defuse the crisis. But the president was undeterred. He wanted to scare America’s trading partners to the bargaining table. “Let’s let it run a couple more days,” he told Bessent. “Do not say we’re willing to negotiate.”

It wasn’t until a few hours before the levies were supposed to kick in that Trump finally relented. On Wednesday, April 9, he announced a 90-day pause on so-called reciprocal tariffs and a 10% interim rate for every country but China. Speaking to reporters outside the White House, Bessent praised the president’s “great courage” for staying the course. Stocks roared back.

The story everyone on Wall Street wants to believe is that Bessent, one of their own, persuaded a reluctant Trump to capitulate on tariffs after friends with billions of dollars at risk called him to complain. That’s the thinking behind the now-infamous acronym coined by a Financial Times columnist—TACO, for “Trump always chickens out.” Bessent insists that’s wrong. “The market did not force him,” he says. “He has a higher risk tolerance than I do.”

The episode sheds light on how decisions are being made in Trump’s second administration. Many on Wall Street and elsewhere see Bessent as a moderating influence, someone who can pull Trump back from the brink, at least on economic matters. Yet during a lengthy interview, he repeatedly downplayed his role, casting himself as a humble counselor whose job is to help the president channel his populist impulses into policies—then translate those for markets. “I do my job, give him options and outcomes, present and then manage the narrative from there,” he says.

--------

Watch Bloomberg Radio LIVE on YouTube

Weekdays 7am-6pm ET

Follow us on X

Subscribe to our Podcasts:

Bloomberg Daybreak

Bloomberg Surveillance

Bloomberg Intelligence

Balance of Power

Bloomberg Businessweek

Listen on Apple CarPlay and Android Auto with the Bloomberg Business app:

Apple CarPlay

Android Auto

Visit our YouTube channels:

Bloomberg Podcasts

Bloomberg Television

Bloomberg Originals