“Like President Reagan overcoming the recession of the Carter era, we will endure as well”
“Tariffs are a one-time price adjustment, different from sustained inflation…we need to build long-term fundamentals”, Scott Bassent, U.S. Treasury Secretary ⓒ Reuters=News1 ⓒ News1 By Ryu Jeongmin, Correspondent,
(Washington=News1) Correspondent Ryu Jeongmin = U.S. Treasury Secretary Scott Bassent argued on the 6th (local time) against the growing concerns about an economic downturn due to President Donald Trump’s reciprocal tariffs, stating that “there’s no reason to consider a recession.”
In an interview with NBC, he pointed to the favorable job growth reported on the 4th, saying, “We can see that we are moving forward beyond expectations.”
Regarding the stock market’s plunge following the tariff announcement, Bassent remarked, “Markets are like living organisms, and you can’t predict how they will react,” adding, “What I can tell you as Treasury Secretary is that we recorded record-breaking volumes on Friday (the 4th), and everything is functioning very smoothly.”
He continued, “The American people find great comfort in this” and remarked, “We sometimes see short-term reactions, and the market is underestimating President Trump.”
He recalled, “Remember on the night of the 2016 election when the market crashed,” and argued, “It later became clear that he would be the most pro-business president in over a century, possibly in U.S. history.”
Bassent emphasized that “no one knows how the market will react in a day or a week,” adding, “What we need to focus on is building long-term economic fundamentals for prosperity, and I think the previous administration pushed us down a road to fiscal disaster.”
He further noted, “Looking at how President Ronald Reagan curbed inflation and overcame the recession of the Jimmy Carter era, although there was some instability at that time, Reagan endured the process, and we will endure it as well.”
In response to Federal Reserve Chairman Jerome Powell’s concern that tariffs could trigger inflation, he claimed, “Tariffs are a one-time price adjustment, which is different from sustained price increases.”
When asked about the possibility of President Trump negotiating the reciprocal tariffs, Bassent stated, “That’s a matter for the President, and President Trump has done what only he could do,” noting, “President Trump exerted maximum influence, leading over 50 countries to convey to the U.S. administration to lower non-tariff trade barriers, reduce tariffs, and stop currency manipulation.”
He further remarked, “Trump has created the maximum leverage for negotiation,” and added, “It’s not an issue that can be negotiated in mere days or weeks.”
Regarding concerns over inflation due to tariffs, criticized even by senior Republicans like Senator Ted Cruz, Bassent defended by highlighting, “During President Trump’s first term, with a 20% tariff on China, the tax or price level rose by 7% over four years,” arguing that “a 20% tariff seems to have been a pretty decent level.”
Bassent also pointed out, “Oil prices fell by almost 15% in just two days,” emphasizing, “This has a much bigger impact on Americans than the stock market.”
Furthermore, he anticipated that “mortgage applications will increase as interest rates hit yearly lows,” indicating an expectation that lower interest rates will revive the real estate market in the long term.
Regarding the tax cuts, another key aspect of President Trump’s economic policy, and whether he expects a tax cut-including budget to pass Congress before the August recess, Bassent replied, “We are aiming for a much earlier date.”
Lastly, on President Trump urging Powell to cut the benchmark interest rate, Bassent stated, “Seeing inflation stabilize, I think the Fed will cut rates as they always have,” but noted, “In the meantime, what we can control is the long-term rates, meaning the 10-year rate, which recorded its lowest on Friday (the 4th), setting mortgage rates and long-term capital formation.”
Bassent concluded, “And going back to the tax issue, passing (the tax cuts) would bring economic certainty.”