US President-elect Donald Trump said Friday that he has chosen prominent investor Scott Bessent as Treasury Secretary, a key Cabinet position with great influence over economic, regulatory and international affairs.
“I am delighted to nominate Scott Bessent to serve as the 79th Secretary of the Treasury of the United States,” Trump said in a statement released on Truth Social. “Scott is widely respected as one of the world’s leading international investors and geopolitical and economic strategists.”
Wall Street has been closely watching who Trump would pick, especially given his plans to reshape global trade through tariffs and extend and potentially expand the series of tax cuts enacted during Trump’s first term.
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Scott Bessent, veteran hedge fund manager and Donald Trump’s pick to be the next Treasury secretary, advocates tariffs, a “shadow president” for the Federal Reserve and, perhaps, a weaker dollar.
If confirmed by the Senate, Bessent will have a broad scope of activity: overseeing public financing, economic sanctions and the IRS (the US Internal Revenue Service); engage in international economic diplomacy; and help ensure the proper functioning of financial markets. Currently heading macroeconomic fund Key Square Group LP, Bessent will be a key player in implementing the president-elect’s agenda, which includes renewing part of the 2017 tax cuts that expire next year and loosening financial regulations.
Below is a summary of Bessent’s positions over the past year on policies that could shape the US economy.
Federal Reserve
Trump has already declared that the president should have some influence over interest rates and monetary policy, a position that would weaken the central bank’s traditional independence from the executive branch. Bessent seems to agree, even criticizing the Federal Reserve in September after a big interest rate cut.
“If you were concerned about the integrity of the institution, you wouldn’t have done this. Especially, I wouldn’t have made such an aggressive cut. In terms of reputation, it’s all about image… tell me, on what planet is it conceivable that waiting two months would make a difference, compared to the integrity of the institution,” he told Bloomberg News on October 11.
Bessent will also play an important role in choosing a replacement for Fed Chairman Jerome Powell, whose term ends in May 2026, as well as at least three other appointments to the board over the next four years. Trump had already considered firing Powell, but Bessent presented a new idea.
In an interview with Barron’s, Bessent said the appointment of Powell’s replacement could be made “earlier, creating a ‘shadow president’.” “And based on the concept of ‘future guidance,’ no one would care what Jerome Powell has to say anymore.”
Foto:Getty Images/ Chip Somodevilla
“If you believe forward guidance is a good thing, why not give forward guidance on who will be Fed chairman? You could do one of two things: the current Fed chairman could be reappointed, creating a path of continuity, or the new appointee could provide guidance beyond the current chairman’s term.” —Bloomberg Radio, October 11.
Rates
Trump has promised to impose massive new tariffs, with duties of 10% to 20% on all foreign goods and 60% or more on goods from China. During the campaign, he also threatened to impose even higher tariffs on specific countries and products.
Although Bessent has suggested at times that Trump adopts a maximalist approach as a negotiating tactic, he demonstrated strong support for the tariffs in an op-ed for Fox News published on November 15.
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“For too long, conventional wisdom has rejected the use of tariffs as both an economic and a foreign policy tool. However, like Alexander Hamilton, we should not be afraid to use the power of tariffs to improve the lives of American families and businesses.”
“Tariffs are also a useful tool for achieving the president’s foreign policy goals. Whether it’s getting allies to spend more on their own defense, opening foreign markets to American exports, ensuring cooperation in combating illegal immigration and fentanyl trafficking, or deterring military aggression, tariffs can play a central role.”
Markets
Treasury secretaries have traditionally avoided attributing market gains to the actions of their superiors, as this would imply taking the blame in times of decline. However, Trump likes to trumpet when markets rise. In an op-ed in the Wall Street Journal on November 11, Bessent played that role for Trump.
“Asset prices are volatile, and long-term economic performance is the true measure. But the last few days have proven the markets’ unequivocal support for Trump 2.0’s economic vision. Markets are signaling expectations of higher growth, lower volatility and inflation, and a revitalized economy for all Americans.”
“The rally in equity markets was particularly unusual given that interest rates also rose. The combination of the steepening yield curve, stable inflation expectations and rising stocks indicates that markets expect Trump’s agenda to promote non-inflationary growth that boosts private investment.”
Exchange Policy
Trump appreciates the dollar’s role as a global reserve currency and the economic and geopolitical power associated with that. However, he also wants an exchange rate weak enough to benefit the US manufacturing sector. That balance could become a pillar of his economic agenda, and as Treasury Secretary, Bessent will oversee U.S. exchange rate policy.
“The reserve currency can rise and fall according to the market. I believe that if you have good economic policies, you will naturally have a strong dollar.” —Financial Times, October 13.
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“It’s a market reaction, and he (Trump) understands that tariffs cause a stronger dollar, so a weaker dollar with tariffs is an economic anomaly. What we can see is the so-called dollar smile. What we have now are high interest rates, a high deficit and inflation above the target. If inflation falls…interest rates could fall, and you would have a market-based devaluation of the dollar. But a deliberate very weak dollar policy, I wouldn’t expect.” —Bloomberg TV, November 5.
“Trump’s election generated the biggest daily increase in the dollar in more than two years, and the third biggest in the last decade. This is a vote of confidence in US leadership on the international stage and in the dollar as a global reserve currency.” —Wall Street Journal, November 11.
Debt and Taxes
Bessent will also be responsible for managing the US public debt, which reaches almost US$29 trillion. He said Trump will seek to reduce federal budget deficits to 3% of GDP, down from about 6.2% at the end of the last fiscal year.
“I think we’re going to do that through deregulation, energy dominance and reprivatizing the economy… I think a priority will be to shut down the (Inflation Reduction Act)… I don’t think anyone will have a problem slowing down or cutting that IRA.” —CNBC, November 6.
Regarding the issuance of ultra-long-term bonds, Bessent said in an interview with Bloomberg on June 7: “When rates are very low, you have to lengthen the duration. I think what Secretary Yellen is doing is very unfortunate. It is financing in the short term, making a bet on carry trade operations, which is not good risk management.”
Bessent will also play a key role in renewing the Trump administration’s signature 2017 tax cuts, many of which expire in 2025.
“I have already spoken to many Republicans who will chair these committees, and I can tell you that in the Republican Congress, especially in the House, there is a great appetite for counterparts. It will be a negotiation.” —CNBC, November 6.
