The U.S. Senate will continue its slate of high-stakes hearings to consider President-elect Donald Trump’s Cabinet nominations days before his inauguration.
Billionaire financier Scott Bessent, whom Trump tapped to head the Treasury Department, will headline today's schedule and appear before the Senate Finance Committee starting at 1030ET:
As Andrew Moran and Nathan Worcester report for The Epoch Times, Wall Street will pay close attention to Bessent’s comments on tariffs.
The Trump Tariffs
Bessent has expressed support for the president-elect’s trade pursuits. In a Fox News op-ed shortly after the November 2024 election, Bessent endorsed the tactic as a negotiating tool, revenue generator, and shield for U.S. industries.
The hedge fund manager has signaled over the past few months that Trump’s tariff policies could be watered down.
In a Nov. 6, 2024, interview with CNBC, Bessent said that tariffs should be “layered in gradually” to ensure that higher prices appear over time and are then offset by the incoming administration’s disinflationary efforts, such as cutting red tape.
In October 2024, he also told the Financial Times that Trump’s universal tariffs were “maximalist” stances that could be chipped away.
“My general view is that at the end of the day, he’s a free trader,” Bessent said.
“It’s escalate to de-escalate.”
Trump has proposed across-the-board 10 percent to 20 percent levies on all imports, with 60 percent to 100 percent tariffs on Chinese goods arriving in the United States. He has also threatened 25 percent tariffs on Canada and Mexico.
Media reports, including one from The Washington Post, suggested that Trump could scale back his tariffs. The president-elect recently denied these reports on his Truth Social social media platform.
“The story in the Washington Post, quoting so-called anonymous sources, which don’t exist, incorrectly states that my tariff policy will be pared back. That is wrong. The Washington Post knows it’s wrong. It’s just another example of Fake News,” Trump posted.
The 3-3-3 Strategy
Lawmakers will likely explore the Key Square Group founder’s “three arrows” growth strategy, also known as his 3-3-3 initiative.
Last summer, speaking at a Manhattan Institute event, Bessent recommended three different economic strategies that the Trump administration could use to stimulate the national economy and improve the federal government’s finances.
This would involve aiming for 3 percent real economic growth, boosting domestic crude oil production by 3 million more barrels per day, and reducing the budget deficit to 3 percent of GDP by the end of Trump’s second term.
“How do you get that?” Bessent asked during the conference.
“Through deregulation, more U.S. energy production, slaying inflation, and forward guidance on competence for people to make investments so that the private sector can take over from this bloated government spending.”
Sen. Elizabeth Warren (D-Mass.) authored a 31-page letter to Bessent on Jan. 12, featuring dozens of questions. In it, she requested further information on his economic strategy and positions on other issues and urged him to be prepared to answer her questions at the confirmation hearing.
When examining Bessent’s 3-3-3 proposal, Warren asked why the first Trump administration’s tax cuts and deregulatory efforts failed to spur 3 percent growth.
“There is no comprehensive record of your positions relating to various Treasury-related duties and key policy areas within the Secretary’s orbit,” Warren wrote.
“The Treasury Secretary must safeguard our financial system, ensure the fairness of our tax system, and expand economic opportunities for the middle class, not just help rich investors make more money.”
A ‘Shadow Fed Chair’
While Bessent dismissed this idea, senators could learn more about his proposal to select a “shadow Fed Chair.”
In October 2024, Bessent recommended that Federal Reserve Chairman Jerome Powell’s successor be chosen before his second term ends in 2026.
“You could do the earliest Fed nomination and create a shadow Fed chair,” Bessent told Barron’s.
“And based on the concept of forward guidance, no one is really going to care what Powell has to say anymore.”
After a meeting with Senate Finance Committee Chairman Mike Crapo (R-Idaho) last month, Bessent walked back the comments.
“As the president said on Sunday, and I’m in complete agreement with him, that Jay Powell will serve out his term,” Bessent told CNBC.
Trump has repeatedly stated that Powell can serve the remainder of his term. The central bank chief has also confirmed that he would not step down if asked to, and said his termination would “not be permitted under the law.”
The president-elect and Powell have had a strained relationship since Trump’s first term. However, the Fed chairman has stated that he expects to maintain a cordial working partnership with the incoming administration.
