Bessent on Tariffs and the Deficit

Listened to Scott Bessent, potential Secretary of the Treasury for a future Trump administration, today on Bloomberg Radio talk about his opinions on the fiscal policy of the Trump-Vance campaign and I have some thoughts.

He claims that Trump’s tariffs won’t be inflationary because it’s a one-time administrative cost adjustment that will be priced into the market. That might be true in the long-term, but the economic shift of a 10% tariff for the United States would be seismic and might even cause a recession to occur. You can’t compare the effects of specific tariffs like those he instituted on steel to the widespread tariffs he plans to implement.

He also deflected from criticisms of Trump’s tax cuts as contributing to the deficit by focusing on the principle of how spending on government programs should be reduced. But this is irrelevant on a fiscal level. On the balance sheet, tax cuts show up the same as government spending. He also claims that tariffs will help pay for it, but as I’ve already noted, there would be massive shifts in the market that would be caused by the tariffs, making the net impact on the deficit hard to predict even if the balance sheet shows a reduction.

What do you think about Bessent’s claims?