Tariff Theory ‘Does Not Support What You’re Saying’: Treasury Nominee Clashes With Dem Senator

Scott Bessent, the nominee for Treasury Secretary in the Trump administration, shut down the ranking Democrat’s claims about tariffs during his confirmation hearing before the Senate Finance Committee on Thursday.

Bessent was grilled by lawmakers, including Senator Ron Wyden (D-OR), who accused President-elect Donald Trump of having “no plan and no strategy” for imposing tariffs on foreign goods, asserting that Americans will “get clobbered” with additional taxes.

“I believe these tariffs, you can call it whatever you want in terms of trying to gussy it up, they’re going to be paid for by our workers and small businesses,” Wyden told Bessent. “All through the campaign we heard they weren’t, that foreign countries were going to pay it. I think that’s baloney. It’s going to be paid for by workers and small businesses.”

“Senator, I would respectfully disagree,” Bessent responded. “The history of tariffs and tariff theory, optimal tariff theory, does not support what you’re saying.”

“If we were to say, use a number that has been thrown around in the press of 10%, then traditionally the currency appreciates by 4%, so the 10% is not passed through,” he said. “Then we have various elasticities — consumer preferences may change, and finally, foreign manufacturers, especially China, which is trying to export their way out of their current economic malaise, they will continue cutting prices to maintain market share.”

Wyden dismissed Bessent’s explanation as an “academic view of it” and repeated that middle-class Americans would get “clobbered” by tariffs.

Elsewhere during the hearing, Bessent emphasized that what would actually hurt Americans is not renewing the 2017 Trump tax cuts.

Not doing so would be an “economic calamity” and cause a “gigantic middle-class tax increase,” Bessent said.

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“Traditionally with these sudden stops, it falls on working Americans,” he said. “We saw the power of these tax cuts in ’18, ’19, and going into January of ’20 before they were interrupted by Covid and they great success that we had.”

During his exchange with Wyden, Bessent also warned that China is focused on energy, not clean energy.

“Just so we can frame this for everyone in the room, China will build 100 new coal plants this year. There is not a clean energy race. There is an energy race,” Bessent said.

Over the last three decades, Bessent has been successful as the chief investment officer at George Soros’ hedge fund. He founded several firms and taught economic history at Yale, his alma mater.

He would also be the first openly gay Treasury Secretary.

Bessent is from South Carolina and was introduced by Senator Lindsey Graham (R-SC), who urged Senate Democrats to vote for him based on his qualifications, not politics.

“If your goal is to play like the election didn’t happen, then I guess you’ll vote no,” Graham said.

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