Treasury Secretary Defends Nationalist Economic Strategy While Managing Market Expectations

From his office overlooking the White House, Treasury Secretary Scott Bessent articulated his approach to leading the cabinet agency responsible for the world's largest economy and most significant debt market.

"We want the most America-first policies that are possible, without incurring market wrath," said the 63-year-old hedge fund manager from South Carolina.

During nine months in office, Bessent has vigorously championed President Donald Trump's aggressive tariff policies, supported the president's efforts to restructure the Federal Reserve—including attempts to remove Governor Lisa Cook—and introduced an era of extensive deregulation and tax reduction measures, encompassing relaxed cryptocurrency regulations and stablecoin promotion.

Expanding the Maga Agenda

Bessent has integrated Trump's political movement into Treasury operations beyond economic policy, pledging to utilize the Internal Revenue Service to investigate left-leaning organizations the government suspects of encouraging political violence. Potential targets could include groups associated with George Soros, the veteran liberal billionaire for whom Bessent previously worked.

On the international front, Bessent is coordinating a multibillion-dollar US rescue package for Argentina to support President Javier Milei, Trump's libertarian ally in Latin America. This initiative positions him on the government side of a currency trade—the type of wager he and Soros, famous for breaking the British pound, once pursued as investors.

Bessent spoke twice with the Financial Times this month, including hours before announcing US sanctions on Russian oil exporters and preceding a critical Asia trip, where he will accompany Trump as the president attempts to resolve recently escalated trade tensions with China.

A Different Treasury Leadership Philosophy

Asked whether he views his role differently from other Treasury secretaries, including Steven Mnuchin who held the position during Trump's first term, Bessent responded: "Unlike most of my predecessors I have a very healthy skepticism of elite institutions and elite opinion, whereas I think they didn't. But I have a healthy regard for the market."

Bessent's unrestrained implementation of Trump's agenda at the Treasury—which functioned as a center of institutional resistance to presidential policies during the first term—has strengthened his relationship with Trump and expanded his influence, according to multiple administration officials and White House-connected individuals.

Critics and former Treasury officials contend that Bessent has not merely challenged the department's free-market orthodoxies regarding trade, government intervention, and central bank independence—he has also increased its partisan character.

Market Performance Under Scrutiny

Bessent has maintained relative market stability in recent months, stabilizing investor confidence following Trump's April launch of a global trade war that triggered sharp selloffs in equities and bonds.

Since his January 28 swearing-in, the S&P 500 equity index has increased approximately 12 percent, while the 10-year Treasury yield—a benchmark for long-term borrowing costs—has declined slightly more than half a percentage point to 4 percent over the same timeframe.

Bessent interprets these figures as vindication against critics who predicted Trump's policies would generate renewed inflation and expand US debt, prompting investor flight. "He is straddling this line between appeasing Trump and appeasing the markets. And so far, he's made it work. Neither have turned on him," said Ian Katz, an analyst at Capital Alpha in Washington.

Bessent frames it more assertively: "Where the hell is the market risk? They've just been wrong."

Navigating Crisis and Controversy

During the chaotic period following Trump's so-called liberation day tariffs in April, Bessent received credit as a stabilizing voice amid market turmoil. Trump quickly suspended some of the highest tariffs and initiated negotiations—as Bessent contacted anxious fund managers to provide reassurance.

He characterized the turbulence as part of Trump's strategic approach, telling the FT the president had always intended to announce elevated levies to establish leverage before reducing them. "He has a higher risk tolerance than I do."

Wall Street regards Bessent as a moderating influence against certain Trump excesses, including dissuading the president from dismissing Jay Powell, the Fed chair, before his term conclusion. Office confrontations have reinforced the Treasury secretary's image of willingness to maintain his position. One incident allegedly turned physical between him and tech billionaire Elon Musk, who financed Trump's election. "When it counts, he's a fighter in our corner," said a Wall Street lobbyist.

Questions About Guardrails

However, some question whether market confidence is misplaced. "Mnuchin was still trying to be a guardrail of sorts, but if markets are looking for Bessent to be a guardrail I think they are looking for too much," said Stephen Myrow at Beacon Policy Advisors, a former Treasury official under George W. Bush. "Bessent has no problem being political, which eventually could run a risk with the market."

Some doubts may be reflected in the dollar, which has declined approximately 8 percent since Bessent assumed the Treasury secretary position. Bessent predicts it will recover as trade deficits narrow. Democrats argue the market is losing confidence in the US economy and American assets.

Reshaping Federal Reserve Relations

In recent months, Bessent's role in amplifying and defending Trump's Federal Reserve criticism has distinguished him from previous Treasury secretaries. Bessent provided unqualified support as Trump attempted to dismiss Cook, a central bank governor nominated by Joe Biden.

The Treasury secretary now leads the search for Trump's next Fed chair. Bessent has challenged candidates on aspects of his 6,000-word essay in The International Economy magazine, which criticized the Fed for exceeding its mandate through non-standard monetary policies such as quantitative easing to maintain cheap money after the financial crisis, and supporting regulation in areas including climate, the FT reported this month.

He anticipates conducting additional interviews in November before presenting top candidates to the president by Christmas. Bessent sees nothing unusual in Trump's Fed restructuring efforts.

He produced a copy of Maestro, Bob Woodward's book on former Fed chair Alan Greenspan, and highlighted a passage describing how Bill Clinton's White House attempted to place preferred candidates on the central bank board in 1994 to counter Greenspan's interest rate increases. "It's always political," he said.

Economic Outlook and Presidential Agenda

Bessent expects Trump's agenda and what he described as emerging productivity gains from artificial intelligence to drive economic expansion next year. This year, employment growth has decelerated and inflation remains persistently above the Fed's 2 percent target. Polling shows Trump receiving poor ratings on economic management.

Nevertheless, Bessent remains convinced the unorthodox policies he implements at Treasury for Trump will succeed. "My job is to give the president options and outcomes and the president decides how far to push things," he said.

The Treasury secretary's approach represents a calculated gamble that nationalist economic policies can coexist with market stability—a balance that will face ongoing tests as domestic and international pressures evolve.