Bessent Warns of Potential Return of ‘Liberation Day’ Tariffs; Dismisses Moody’s Downgrade

U.S. Treasury Secretary Scott Bessent recently addressed concerns about the potential re-imposition of tariffs on several trading partners as part of President Donald Trump’s controversial “liberation day” tariffs. In an interview held on NBC News’ “Meet the Press” on Sunday morning, Bessent indicated that if negotiations do not progress favorably, these tariffs—suspended for an interim period—would be reinstated post the July 90-day suspension.

Under Pressure: The Expected Tariff Hike

Bessent explained that countries would receive notification delineating the new tariff rates before the expiration of the current pause. “They are going to get a letter saying, ‘Here – here is the rate,’” Bessent mentioned, urging trading partners to actively engage in negotiations. He cautioned that if countries fail to negotiate “in good faith,” they could find themselves subject to the original tariff levels that had been in place before the suspension on April 2.

In a separate statement, President Trump echoed Bessent’s sentiments, asserting that his administration would take unilateral action and impose new tariffs in the near future if necessary. “The negotiating leverage that President Trump is talking about here is if you don’t want to negotiate then it will spring back to the April 2 level,” said Bessent. While specific timelines for the implementation of these tariff rates weren’t disclosed, he emphasized that the administration is prioritizing negotiations with 18 crucial trading partners.

Negotiation Strategy and Regional Focus

The Treasury Secretary elaborated on the administration’s strategy, indicating that the U.S. government may also look at regional tariff agreements. “There are a lot of smaller trading relationships that we can just come up with a number,” he remarked. This could mean establishing different tariff rates based on geographic regions, such as specific rates for Central America or parts of Africa.

Despite the administration’s intent to negotiate, Bessent acknowledged that these actions would ultimately affect U.S. consumers, particularly as large retailers like Walmart have already announced plans to raise prices due to the escalating costs of imports. Following this news, Trump took to social media to tell Walmart to “EAT THE TARIFFS,” highlighting the intricate balance between protecting American businesses and mitigating consumer impact. Bessent confirmed he had discussed pricing with Walmart CEO Doug McMillon and stated that while some tariff costs may be absorbed by the retailer, consumers could still see price increases.

Dismissal of Moody’s Credit Rating Downgrade

Alongside tariff discussions, Bessent also addressed the recent downgrade of the U.S. government’s credit rating by Moody’s, which cited concerns over rising debt levels. Bessent was quick to dismiss the downgrade, suggesting that it is a “lagging indicator” of economic health. He attributed the current fiscal deficit to previous administrations’ policies and confirmed ongoing investor confidence, stating, “There’s trillions of dollars coming into the U.S.”

Bessent criticized the Biden administration’s handling of the current deficit, arguing it stemmed from an “inherited 6.7% deficit to GDP.” He contrasted this viewpoint with former Treasury Secretary Larry Summers, acknowledging that while they don’t always see eye-to-eye, Summers previously downplayed earlier credit downgrades, setting a precedent for his current dismissal of the Moody’s assessment.

Conclusion

The interviews and statements made by Secretary Bessent reveal a government strategy focused on aggressive tariff negotiations as part of a broader economic policy aimed at renegotiating trade terms with key partners. However, the prospect of returning tariffs raises valid concerns about their impact on consumer pricing, particularly in retail. Additionally, the dismissal of credit rating downgrades highlights a disconnect between governmental fiscal challenges and market confidence, making it a point of contention among investors and policymakers alike.