Treasury Secretary Scott Bessent explains the government's new tariff policy and why action must be taken to prevent an economic downturn.

Compiled by: Deep Tide TechFlow

Guest: Scott Bessent, U.S. Treasury Secretary

Host: Tucker Carlson

Podcast Source: Tucker Carlson

Original Title: Treasury Secretary Scott Bessent Breaks Down Trump's Tariff Plan and Its Impact on the Middle Class

Broadcast Date: April 5, 2025

Key Points Summary

Treasury Secretary Scott Bessent explains the government's new tariff policy and why action must be taken to prevent an economic downturn.

Highlights Summary

• The Federal Reserve should maintain independence in monetary policy.

• The ultimate goal of tariffs is to bring factories back to the U.S., which is the best solution to overcome tariff barriers.

• In the long run, stock market performance is closely related to the quality of policies. For those who believe the market decline is entirely due to presidential economic policies, I can tell you that this market decline began with the announcement of China's AI DeepSeek.

• Government efficiency can be improved, rather than simply cut or eliminated.

• The tariff policy aims to raise the real wage levels of American workers and improve their quality of life. I said during the campaign: Wall Street is doing well, and it can continue to perform well, but now is the opportunity for the ordinary American people.

• The Democrats have a strategy called "compensating the losers," but I believe the bottom 50% of Americans are not losers; rather, the system is broken. We need to fix this system.

• The U.S. tariff policy can be traced back to Alexander Hamilton, who used tariffs to fund the new nation and protect American industry. President Trump added a third leg to this foundation by using tariffs for negotiation.

• Our current government operates like using traditional taxis, while our economic environment has long entered the Uber era. Why can't our government be as flexible and efficient as the gig economy?

• What gives me confidence is the relationship between President Trump and President Xi. When you have direct communication channels at the highest level, I think it becomes very difficult for things to spiral out of control.

• Coastal areas are doing well, while the quality of life in the Midwest has declined, expectations for life have decreased, and they believe their children will not have a better life than they do. Many do not care about this, but President Trump cares, and this government cares.

• These people just want to live better lives; they want their communities to improve and their children to have a brighter future than they did.

• I believe the most important thing we can do is to lay a solid foundation for the underlying economy. If the underlying economy is good, taxes are stable, businesses are predictable, and if we have cheap and abundant energy, deregulation, and treat our workforce well, then we will have a great stock market.

• I think a 5% interest rate is a dangerous area for the U.S. economy, especially since the Treasury needs to issue a large number of bonds. Although rates have decreased now, I still worry about whether we can reasonably cut spending while curbing waste, fraud, and abuse; I fear these issues will be overlooked.

• Regarding dollar policy, the only people who should be listened to in the market are President Trump and myself. We are the only ones qualified to represent the U.S. government in discussions about dollar policy.

Trump's Tariff Plan

Tucker:

The Treasury Department announced a brand new global tariff system yesterday. This plan is not sudden; in fact, the president has been committed to pushing this policy for 40 years. However, this announcement still surprised many, including some of his supporters. Overall, what impact do you think this policy will have?

Scott Bessent:

As you said, the president has been talking about this issue for forty years. This is transformative for the U.S. economy, American workers, and the new Republican coalition. It is a combination of old and new ideas, with some old ideas being set aside. The U.S. tariff policy can be traced back to Alexander Hamilton, who used tariffs to fund the new nation and protect American industry. President Trump added a third leg to this foundation by using tariffs for negotiation.

But I don't think this is strange. When Ronald Reagan took office in 1980, I was a college freshman. That was a turning point for America, and it was also full of challenges. Looking back at that time, people have a nostalgic view of President Reagan's administration, but in reality, the situation was very volatile.

President Reagan persevered. In the early 1980s, a farmer, dissatisfied with rising interest rates, attempted to attack Federal Reserve Chairman Paul Volcker with a shotgun. Then in 1984, President Reagan won re-election by a landslide. I think they even let Mondale win Minnesota just to make things look better.

This is what President Trump is doing now. For years, American workers and the middle class have been hit hard, and American workers have borne tremendous pressure. The "China Shock" since 2004 has had a huge impact on American manufacturing, and American workers have never recovered from the China shock. President Trump recognized this 40 years ago. Since his campaign in 2015, he has been promising American workers that the old standard of living can return.

In the past 20 years, or even longer, since the China shock, there has been a huge distribution problem, coastal areas are doing well, while the quality of life in the Midwest has declined, expectations for life have decreased, and they believe their children will not have a better life than they do. Many do not care about this, but President Trump cares, and this government cares.

Many of our trading partners, including some of our allies, are not good partners. If tariffs are so bad, why do they still impose tariffs? Or if American consumers will bear all the tariffs, why do they care about tariffs? Because they also need to bear the consequences of tariffs.

This marks the beginning of America's re-industrialization. We have shifted to a highly financialized economy, and we have stopped producing, especially many things related to national security. The Covid pandemic exposed the vulnerabilities of global supply chains, and we found that these highly efficient supply chains lack strategic security, such as no longer producing our own medicines, semiconductors, and ships.

So if I were to say, what good impact Covid has brought, it is that it made the world aware of these supply chain issues; economic security is national security. President Trump and I have discussed this a lot. This is a national security issue we see here, but it is also an economic security issue. It aims to raise the real wage levels of American workers and improve their quality of life. I said during the campaign: Wall Street is doing well, and it can continue to perform well, but now is the opportunity for ordinary Americans (especially the middle class and working class).

Current Stock Market Situation

Tucker:

Wall Street has long been regarded as a measure of economic health, such as how the Dow Jones index is performing. We even have entire TV channels dedicated to tracking its dynamics, and over the past few decades, this index has been rising most of the time.

Therefore, if the average level of the stock market declines, many people will think this means the economy itself is in recession. Do you think this is a fair measure?

Scott Bessent:

The market will always fluctuate. Warren Buffett has a saying: in the short term, the market is a voting machine; while in the long term, it is a weighing machine. In the long run, stock market performance is closely related to the quality of policies.

For those who believe the market decline is entirely due to presidential economic policies, I can tell you that this market decline began with the announcement of China's AI DeepSeek, and for the past 18 months, it has been the so-called Mag 7 tech stocks dominating the market.

Tucker:

It seems that the development of AI has created a new sense of reality in the market.

Scott Bessent:

The U.S. still maintains a lead in the field of AI, but stocks related to AI have indeed begun to pull back. From an analytical perspective, this adjustment is more of a Mag 7 issue rather than a problem for the entire market.

Tucker:

So this is a deeper issue. Are you saying that in this specific case, the tech stocks are actually measuring the value of companies relative to foreign companies?

Scott Bessent:

If we look at the equal-weighted S&P 500 index, even with the stock market down 4% today, this fluctuation is almost negligible from a long-term trend perspective.

I believe the most important thing we can do, and what I can do as Treasury Secretary, which President Trump also wants to do, is to lay a solid foundation for the underlying economy. If the underlying economy is good, taxes are stable, businesses are predictable, and if we have cheap and abundant energy, deregulation, and treat our workforce well, then we will have a great stock market.

Will Americans Get Significant Tax Cuts Due to Tariffs?

Tucker:

When introducing the tariff plan, the president mentioned that tariff revenue could fund the government, thereby alleviating the tax burden on taxpayers. So, do you think this will encourage Congress to approve tax cuts for the middle class?

Scott Bessent:

An important role of tariffs is to help the U.S. resist the unfair economic systems of other countries. For example, China's economic model is completely different from that of the U.S.

China's low-cost economy actually relies on cheap labor. Additionally, they support industrial development through subsidized loans and have set up many non-tariff barriers, such as prohibiting the dissemination of foreign media. Therefore, the U.S. uses tariff revenue to address these issues.

According to traditional tariff revenue models, if a 10% tariff is implemented, the currency may appreciate by 4%. Of that, foreign producers bear about 4%, and American consumers may face about a 2% price increase. A study from MIT showed that during President Trump's first China tariff policy, a 20% tariff led to a price level increase of only 0.7%.

So to answer your question, if we can impose a 20% tariff and make foreigners pay this portion, and use this money to reduce our government deficit and keep taxes low, this is a very unique formula that hasn't been tried in this country for a long time.

Tucker:

Do you think this requires Congressional involvement to achieve, since tax rates are set by Congress, right?

Scott Bessent:

We are currently in a very strange state, you could say we are in a transitional phase between tariff revenue and government spending cuts. According to the Congressional Budget Office (CBO) scoring, I have been on the other side of the wall for the past 35 years, but I didn't actually realize that the CBO scoring is very much like Enron accounting; it is not real.

They assume the economy will grow by 1.7% or 1.8% over the next ten years, and this number does not change whether you raise or lower taxes. That is why during the campaign, when Vice President Harris announced all the significant tax increases she wanted to implement, the CBO scored her very well. Meanwhile, President Trump wants to make the tax cuts from 2017 permanent. Because obviously, when you cut taxes, revenues increase significantly.

Long story short, we will not gain recognition in any bill because of tariffs, as Congress will not legislate. The president is using executive power to do this, but that money will come in. Just in his first term, we have already collected hundreds of millions from tariffs on China, and we collect about $35 billion a year from old tariffs alone. So, within the CBO's time window, that is about $350 billion, which funds many of the president's commitments.

No tip tax, no Social Security tax, no overtime tax, allowing interest deductions for cars made in America. Think about what the president is doing; he is providing an affordable solution for the bottom 50% of white workers, as they are the ones benefiting from these four plans.

How Much Revenue Can Tariffs Bring to the U.S.?

Tucker:

Looking ahead to the next year, that is, until next April, how much revenue do you think the U.S. government can generate from the tariff policy announced yesterday?

Scott Bessent:

This number will change with circumstances, but it is expected to be between $300 billion and $600 billion. But what will ultimately happen over time? The ultimate goal of tariffs is to bring factories back to the U.S., which is the best solution to overcome tariff barriers. So, moving factories back from China, Mexico, and Vietnam.

Tariff revenue will be very substantial in the early stages, but as manufacturers begin to establish factories in the U.S., tariff revenue will gradually decrease, while the job opportunities and income tax revenue from these new factories will gradually increase. The trade deficit will also decrease due to more products being produced locally, and the decline in tariffs and growth of the domestic economy will create a virtuous cycle.

Bringing Manufacturing Back to the U.S.

Tucker:

You have thought deeply about this issue. So, do you think the U.S. has enough labor force to complete this transition of bringing manufacturing back?

Scott Bessent:

I believe we are fully capable of completing this transition. With the proliferation of artificial intelligence and automation technologies, many factories will upgrade to smart factories, significantly reducing reliance on traditional labor. I believe our existing labor resources can adapt to this change. However, aside from my support for President Trump's policies, I am also concerned that high government spending leading to debt issues could trigger a financial crisis.

On one hand, we are adjusting the trade structure through tariff policies, and on the other hand, we are working to reduce redundant federal labor while lowering federal borrowing. These measures will free up more labor to support the development of new manufacturing. We need to reactivate the private sector, as it has been overly regulated during the Biden administration, leading to relatively stagnant development. Now is the right time to adjust the size of government and reduce regulatory burdens.

Tucker:

Have you considered that issues like illegal immigration, the impact of artificial intelligence on the labor market, and the uncertainty of tariff policies could have unpredictable effects on the economy? Especially the tariff policy, while we can speculate on its effects, we have never actually experienced anything like this. Additionally, other countries' responses to tariffs are also full of uncertainty. Do these issues make it difficult for you to predict the future economic direction?

Scott Bessent:

Indeed. I think with so many unknowns, it is difficult to be 100% certain. But we can set a reasonable range and continue to push policies within that range. I remember a few weeks ago, during a program, a commentator asked me if I could guarantee there would be no recession. I replied that no one can guarantee anything. However, there are currently no signs that we are heading into a recession. Just as President Reagan believed in the success of supply-side economics, I also believe these policies will work.

The old system can no longer adapt to current economic demands. If a system is no longer effective, we need to be brave enough to make changes. While continuing to rely on old models may make the economy appear "healthy," like a bodybuilder using steroids to build muscle, it actually damages the core structure of the economy.

Bodybuilders are out there using steroids. They look great. You know, muscular. But in reality, you are destroying your vital organs. That was the situation at the time. But it is easy to keep pushing the economy, borrowing a lot of money, and creating a lot of government jobs.

If we continue to rely on excessive borrowing and expanding the size of government, we may ultimately fall into disaster. Looking back at the financial crisis of 2007 to 2008, the economy seemed prosperous before the crisis, but the seeds of trouble had already been sown. The same situation occurred before the bursting of the internet bubble, where many companies like Enron and WorldCom appeared to be "doing well" before their collapse.

I believe our current government has taken some measures to avoid similar financial disasters. For example, after the 9/11 attacks, airlines delayed reinforcing cockpits due to cost issues, and the FAA did not apply enough pressure. Now, we have reinforced cockpits to avoid similar problems. I believe the current policies are necessary "reinforcements" before an economic collapse to ensure stable development.

Foreign Countries' Opposition to Tariffs

Tucker:

What lobbying strategies might governments employ in the next three months? The president mentioned yesterday that he plans to implement a unified universal tariff policy, meaning the same standards will apply to all countries. Of course, each country's situation is different, such as trade deficits, currency manipulation, regulatory environments, and existing tariffs, all of which will affect specific adjustments. As you said, this is a dynamic process. If I were a country, like Vietnam or China, I would definitely try to exert pressure on the U.S. government in various ways to seek more favorable adjustments. How do you think this situation will develop?

Scott Bessent:

It ultimately depends on the president's decision. I think his attitude is that this unfair trade situation has persisted for too long, and we need to reassess and adjust, whether it is with friendly countries or competitors. Personally, I believe that direct dialogue with companies may be more important than negotiations with foreign governments.

So what do companies want to do? As President Trump said yesterday, the best way to avoid tariffs is to build factories here. What can the Treasury do to help with this? We are pushing for the passage of tax legislation so that we can assure them of low tax rates and full depreciation in the first year. We are working with Secretaries Bergen and Wright to ensure energy security and to reduce regulations.

TSMC is the world's largest semiconductor manufacturer, and EPA Administrator Lee Zedong is pushing for all the permits they need because we have just entered a regulatory quagmire, and it takes too long to get things done in this country. Therefore, I think announcements from individual companies will be more interesting than announcements from countries.

Will China Retaliate?

Tucker:

If you want to sell goods to Americans, you must manufacture in the U.S. or pay tariffs. So how will China, as a country, respond? This is a direct challenge they face. While this policy will affect many countries globally, China is undoubtedly the most affected. What kind of response measures will they take? Is retaliation possible?

Scott Bessent:

I am not sure if they can retaliate for several reasons. If you look at history, if we look back, we can see that although the U.S. is a debtor nation and has a trade deficit, surplus countries are actually in a weaker position in this situation. China's business model can be said to be one of the most unbalanced in modern economic history. For example, their exports as a percentage of GDP and their relationship with the population are very unusual. This model makes it difficult for them to adjust.

**Currently, China is facing an economic recession or depression brought on by **deflation, and they are trying to alleviate economic pressure by expanding exports, but the U.S. tariff policy clearly prevents this. To some extent, **China's manufacturing model is like the broom in Disney's "Fantasia," which keeps bringing water and cannot stop; this over-reliance on exports has become deeply ingrained in their **business model.

So what would be the ideal situation? I think the U.S. and China could try to reach some kind of agreement. For example, the U.S. wants to increase the proportion of manufacturing while reducing consumption, while China needs to reduce excessive manufacturing and increase domestic consumption. China's economic structure is severely imbalanced, with excess manufacturing and ordinary consumers not receiving fair treatment. This phenomenon is known as the "middle-income trap," where Chinese households' income growth stagnates at a moderate level and cannot be further improved.

Can we cooperate to solve this problem? For example, rebalancing the economic structures of both countries. China can reduce manufacturing and increase consumption, while the U.S. can reduce consumption and increase manufacturing. Even if the two countries remain military adversaries, they can be economic competitors, but this competition will be more balanced. This will not be achieved in the short term, but in the coming years, China may have to adjust its direction because their existing business model has encountered problems, and President Trump's tariff policy is key to breaking this model.

Tucker:

Your description reminds me of a classic case: if you borrow a small loan from a bank, the bank has the upper hand and can reclaim collateral at any time. But if you borrow enough money, it can actually give you some control over the bank.

Scott Bessent:

Indeed, China's dependence on the U.S. market is enormous; they cannot survive without us.

Tucker:

Do you think there are clear enough communication channels between the two governments to address these issues while avoiding uncontrollable situations?

Scott Bessent:

What gives me confidence is the relationship between President Trump and President Xi. When you have direct communication channels at the highest level, I think it becomes very difficult for things to spiral out of control.

How Will Europe Be Affected?

Tucker:

What about the rest of the world? Europe?

Scott Bessent:

Looking back, there was a famous meeting where President Trump told the Europeans, "You are crazy for building Nord Stream 2. What are you doing? You are already getting most of your energy from Russia, and now you want to double down."

They indeed did, and as a result, someone blew it up. But although the Europeans are reluctant, I think they must also rebalance. Germany, as a very unbalanced export economy, faces the advantages of deindustrialization. They are the opposite of us; their energy costs are high. They rely on Italy and southern countries to keep the euro low, and they are selling to China. And now, China is becoming their competitor.

Tucker:

The situation you mentioned reminds me of President Reagan's first term. The year 1980 was a significant turning point, with the economic recession successfully controlled between 1980 and 1982, followed by a historic victory in 1984. Do you think similar results could emerge within four years?

Scott Bessent:

Yes, the only difference is that the competition back then, while fierce, was more civilized. The real danger now is that if the midterm elections go poorly, it could trigger a series of political struggles, such as impeachment of the president, which would make the public weary of politics again. Einstein defined madness as doing the same thing over and over again and expecting different results.

Tucker:

You think the current state of America is indeed dire. Driving across the U.S., you find that the standard of living is declining in many places. People want to see new policies bring significant improvements within four years. Do you think this is achievable?

Scott Bessent:

I believe it is possible. What we have done before clearly hasn't worked, so we must try new strategies. I am confident in the effectiveness of this approach. For example, President Trump's tariff policy was thought to harm American wage earners, but in fact, the economic performance of wage earners has outperformed that of management. The net worth of the bottom 50% of households has even grown faster than that of the top 10%. However, wealth distribution remains severely imbalanced, with the top 10% of Americans holding 88% of stock market wealth, while the bottom 50% are heavily in debt. We must help these families alleviate economic pressure.

I see two thought-provoking data points: by the summer of 2024, the number of Americans vacationing in Europe will reach a historic high, while the number of people using food banks will also hit a record high. I visited two food banks near my hometown, and they told me that more and more working families are turning to food banks because they cannot afford weekly food expenses. These families are not homeless or living on the streets; they are ordinary working families who simply cannot afford basic living expenses.

But they are seeing a new phenomenon, which is not their traditional clientele, not those who have lost their homes or are living on the streets. These are working families who can no longer afford to spend $100 a week at the grocery store for a basket of food. They are missing five, six, or seven items each week, so they come to the food banks to supplement. Therefore, this is not a great record: record numbers of Europeans vacationing while food banks also hit record numbers.

We can continue to set new records for the number of people vacationing in Europe, but we must also take care of those who need help. They do not want charity; the Democrats have a strategy called "compensating the losers," but I believe the bottom 50% of Americans are not losers; the system is the problem. We need to fix this system, provide them with good job opportunities, ensure their children have better lives, and alleviate their debt burdens. This is not difficult to achieve, and I believe we can do it in the next four years.

Are the Upper Class Disconnected from the Lower and Middle Class?

Tucker:

You grew up in a middle-class and working-class family background, but now you are very successful and have lived among the wealthy for a long time. In such an environment, do you feel the upper class is concerned about the real state of the country? For example, do people say, "I just drove 100 miles and found that the situation is not optimistic; people's lives are far from what they imagined." Does such discussion exist? Or is it that, in reality, no one cares about these issues?

Scott Bessent:

Frankly, there are times when I do feel a disconnect. For example, if my private jet is delayed by an hour, my entire day's schedule is thrown off. You can't imagine, "Oh my God, I need to find a new charger." These issues may seem trivial in wealthy circles, yet they often become their main complaints.

However, I am very sensitive to the social conditions in America because my family was once very wealthy. We were early settlers, and the family wealth lasted for about 250 years. However, my father made many poor financial decisions, and ultimately we lost all our wealth. When I was born, our family was still considered wealthy in the initial years, but then everything disappeared.

I have personally experienced this transition. I know what it feels like to be economically insecure. I believe no one should have to go through such hardship. As long as people are willing to work hard, they should have the opportunity to live a better life.

People are willing to put in the effort. Now, going back to President Trump's campaign, I was also involved. I remember one of the most touching things for me was attending the last two campaign stops. One was in Pittsburgh, and the other was in Grand Rapids, Michigan.

When I walked into the venue, I saw many union workers and steelworkers wearing hard hats and work clothes, bringing their children to the event. These people just want to live better lives; they want their communities to improve and hope their children can have a brighter future than they did. They do not care about the luxurious life on Madison Avenue, nor do they understand the high-end restaurants that have recently opened in Paris.

President Trump successfully united these ordinary workers with some of the wealthiest people in the world, like Elon Musk, forming an incredible coalition. I think this is very unique and remarkable.

What Concerns You the Most?

Tucker:

As Secretary of the Treasury, what are you most worried about?

Scott Bessent:

In my career, I believe my greatest strength is risk management. Therefore, I will focus on two aspects: one is how to effectively market U.S. bonds, and the other is the potential for major crises. I believe that as the U.S. economy and fiscal situation improve, I will have more positive stories to share. But at the same time, I am also thinking about serious problems that may arise.

Tucker: What kind of problems?

Scott Bessent:

For example, how would we respond if a region experiences another large-scale outbreak similar to COVID-19? While we cannot always worry about these things, I do worry that a war might break out somewhere. I try to make myself worry a little less each day. I officially took office on January 28. At that time, the yield on the U.S. ten-year Treasury bond was nearly soaring to 5%. This rate is a key indicator for the national economy, affecting mortgages and capital formation.

I believe a 5% interest rate is a dangerous zone for the U.S. economy, especially since the Treasury needs to issue a large amount of debt. Although rates have decreased now, I still worry about whether we can reasonably cut spending while curbing waste, fraud, and abuse; I fear these issues will be overlooked.

I am also concerned that the tax bill may get stuck, which could lead to the largest tax increase in history. At the same time, I am paying attention to some geopolitical issues, such as Iran, Taiwan, and the conflict between Russia and Ukraine, which could impact the global economy.

Tucker:

You mentioned that you are a bond salesman responsible for marketing U.S. debt to the world. I know this is an important job during a transitional period. How do you defend U.S. bonds? Has your marketing strategy changed after yesterday?

Scott Bessent:

We are currently in a unique state because tariff revenues have significantly increased while we are also drastically cutting spending. Although these changes have not yet been fully recognized by the market, it seems the market has begun to react in advance. The yield on the ten-year Treasury bond has dropped from nearly 5% to 4%. Each basis point decrease can save about $1 billion, which means we have already saved $100 billion.

This situation may not happen frequently, but I believe we are laying the groundwork for better fiscal conditions. The market is no longer worried about the U.S. losing control or defaulting; I am building a better argument for the credibility of U.S. bonds every day. If we simplify the government's fiscal formula, G = S - T (spending minus taxes).

On the spending side, Republicans tend to reduce spending, while Democrats tend to increase it. However, both sides like spending. What if we could truly lower the level of spending? This is an exciting idea, even though no one has really proposed it seriously in the past, including President Reagan.

President Reagan had his own agenda, such as increasing defense spending. At that time, his "Star Wars" program was considered crazy, but it ultimately succeeded. By significantly increasing military spending, he forced the Soviet Union to follow suit, and the Soviet Union eventually collapsed under economic pressure. This is a strategy of "escalate to de-escalate," which was highly controversial at the time, but in hindsight, it was effective. Returning to the current situation, I believe we are doing well in lowering credible spending levels. At the same time, I am conveying a message to people: government efficiency can be improved, rather than simply cutting or eliminating it.

If we can achieve better results with fewer resources, it seems incredible, but it is possible. I have lived in Manhattan and also in Florida. Comparing the population sizes of these two states, they are actually quite similar, with Florida even having a slightly larger population. However, New York's budget is $235 billion, while Florida's budget is only $125 billion. Florida has no income tax, better infrastructure, and it takes only 15 minutes to get a driver's license, compared to 5 hours in New York. I wonder if we can make other parts of America more like Florida rather than New York? Or one day, can New York become more like Florida? This is a direction worth exploring.

Long-Term Gains of DOGE

Tucker:

Do you think that in the next four years, thanks to the DOGE project (assuming it continues to progress), we will see actual reductions in government spending? How long will Elon Musk continue to play an important role in this project?

Scott Bessent:

After adjusting for inflation, I think this is achievable. But I am not sure how long Elon’s daily involvement will last, but I believe his influence will persist in the long term. However, I have noticed that mainstream media has been trying to demonize the DOGE project and everyone involved in it.

I personally interviewed and hired some excellent employees from the Treasury and the IRS, and I was impressed by their capabilities. For example, there is a person named Tom Klaus, who appeared on Bret Baier's show a few days ago. He completed $100 billion in tech mergers and acquisitions in my investment business. I wanted to hire him, but his capabilities were so strong that I felt I couldn't afford his salary.

But he chose to serve the country purely out of patriotism. He conducted an in-depth analysis of the entire system without direct contact with the payment system and identified all the vulnerabilities in just six weeks. Additionally, there is a young man named Sam Kirkus, who joined me on Laura Ingraham's show a few days ago. This is my suggestion; I hope that by giving him a public voice, we can put an end to the demonization he faces.

This young man is very special. He likes to joke that he has only one pair of pants besides his factory uniform. His humility and dedication are admirable. I think if our daughter brought someone like him home, we would all be happy. He is a true patriot, working for the benefit of the country. What he does at the IRS mainly targets their technical systems, which is exactly where his expertise lies.

Elon has a special shirt that he occasionally shows under his jacket, which says "Support Taxation." Meanwhile, our current government system resembles an outdated Blockbuster video rental store, while we should actually be as efficient and modern as Netflix.

(Deep Tide TechFlow Note: The comparison between Blockbuster and Netflix is used to describe the gap between traditional and modern efficiency in government, emphasizing the need for reform.)

The way our government operates now is like using traditional taxis, while our economic environment has long entered the Uber era. Why can't our government be as flexible and efficient as the gig economy?

Corruption Issues at the Federal Reserve

Tucker:

Who is really in control of the Federal Reserve? I have never quite understood why there is such a key institution that clearly has a direct impact on the market yet seems completely free from political control. What is going on here?

Scott Bessent:

At my confirmation hearing, I attended a dinner with Federal Reserve Chairman Jerome Powell. At that hearing, I stated that I would only discuss the mistakes the Federal Reserve has made in the past and the mistakes it might make in the future. But overall, I believe the Federal Reserve should maintain its independence in monetary policy.

However, in recent years, the Federal Reserve has invested a lot of energy in other areas, such as regulation and climate issues. I believe this has actually weakened their focus on monetary policy, making the entire system more fragile. Therefore, my view is that the Federal Reserve should return to its core responsibilities, focusing on monetary policy, serving the U.S. economy and its people, and striving to maintain low inflation. Other matters, such as climate issues, should be left to other relevant agencies.

Tucker:

Are you saying the Federal Reserve is now even managing the weather? What exactly have they done regarding climate issues?

Scott Bessent:

Let me explain. There is a committee chaired by the Secretary of the Treasury called the Financial Stability Oversight Council (FSOC), which brings together all major financial regulatory agencies. Just two weeks before the collapse of Silicon Valley Bank, the FSOC released a report claiming that climate change is the biggest risk facing the current financial system. Can you believe it? They actually think climate issues are more important than the chronic asset run on a major bank in California, which ultimately led to the collapse of another bank.

In my view, climate issues are not as severe as they describe; the real problem is regulatory negligence, and I think people are tired of this situation. It reminds me of a term President Trump once mentioned—common sense. Common sense tells us that if a bank has a large amount of deposits that could be withdrawn at any time, it should not hold long-term assets. Yet these regulatory agencies are busy focusing on weather issues while ignoring real risks. Moreover, this phenomenon also involves what is known as "regulatory capture." For ordinary people, this may seem unbelievable, but it does exist.

Why Gold is So Important Right Now

Tucker: Why is gold flowing so frequently around the world?

Scott Bessent:

There are several reasons behind this. First, the flow of gold is related to tariff policies. Initially, we were unsure whether gold would be exempt from tariffs, but it was later confirmed that gold has been exempted. This has led to a significant amount of gold being transferred from vaults in Switzerland and London to New York. Additionally, gold has always been favored as a means of storing value. Although digital assets like Bitcoin have gradually become a new way to store value in recent years, gold has historically played this role.

One of the main sources of current gold demand is China. As I mentioned earlier, China is now experiencing an economic recession or even depression. The Chinese monetary system is constrained by capital controls, which has led to a loss of trust in the renminbi. With 1.4 billion people in China wanting to transfer funds abroad, they cannot do so due to policy restrictions. However, they can buy gold, which has become an alternative option.

Tucker:

So you think this is a reaction to the current situation? But interestingly, even by 2025, as the economy becomes increasingly digital and abstract, gold is still widely regarded globally as a reliable store of value.

Scott Bessent:

I believe the appeal of gold is closely tied to its deep historical background. I have a friend whose grandmother experienced severe inflation during the 1998 Russian financial crisis. To cope with economic uncertainty, she bought 18 bicycles and stored them in her apartment. For her, those bicycles were her "store of value."

Tucker: How did her bicycle investment perform?

Scott Bessent:

Very successfully. I wish I could have her foresight. Besides this special case, gold has many other uses; for example, in India, gold is often used to make jewelry. Historically, there has always been a consensus on the value of gold.

Gold has a significant characteristic: it is not affected by fiscal issues. Gold does not generate budget deficits and does not participate in wars. As an independent asset, gold is particularly unique. Before President Richard Nixon announced the U.S. departure from the gold standard, the global trading system was closely tied to gold.

Zelensky's Self-Destructive Negotiation Strategy

Tucker: How did you interact with President Zelensky?

Scott Bessent:

President Trump appointed me to go to Kyiv to lead negotiations for an economic agreement. This agreement is a key component of his peace plan. First, we need to understand the overall framework of President Trump's peace plan. This plan is designed very meticulously, aiming to achieve multiple goals through an agreement with Ukraine.

First, this agreement will further strengthen the cooperative relationship between the U.S. and Ukraine. Second, it will send a clear signal to Russia: the U.S. will not abandon Ukraine. More importantly, this agreement will also show the American people that we have clear economic interests in Ukraine, rather than simply providing large-scale aid, which has been a common form of U.S. foreign aid in the past.

If Ukraine can succeed, we will also benefit, and this can become a long-term partnership. At that time, I thought it was very important to personally go to Kyiv to discuss the agreement with President Zelensky. Although some suggested I meet him in Vienna or wait to talk at the Munich Security Conference a few days later, I insisted on going to Kyiv in person. That is why I ultimately flew to Poland and then took an overnight train, arriving in Kyiv after a ten-hour journey.

Just four hours before I arrived in Kyiv, Russia bombed the city. This was the first bombing of Kyiv by Russia since last November. This was clearly a response to the agreement, as Russia believed this agreement could establish a more lasting cooperative relationship between the U.S. and Ukraine.

Tucker: What happened?

Scott Bessent:

That day, President Zelensky intended to sign the agreement. We had in-depth discussions, and I told him that there were 50 reporters waiting outside. I came here to convey a message: there is no division between the American people and the Ukrainian people.

He told me he would sign the agreement at the Munich Security Conference. However, he ultimately did not sign the agreement, leading to a series of complex follow-up issues. The following week, Ukraine requested to visit the White House, but we wanted him to sign the agreement before the visit.

He arrived at the White House but destroyed what should have been a very simple agreement. He was supposed to attend a press conference and then have a private lunch. If he had any opinions, we could have discussed them during lunch. However, the agreement was never signed. Even in the East Wing ballroom, the table for signing the agreement was already prepared, but none of it happened.

This reflects some issues within the Ukrainian government. Their pension system and bureaucratic costs rely on funding from American taxpayers, and Ukraine has the lowest retirement age in Europe at just 60 years. In contrast, France is 62, and Italy is 67.

Tucker:

So why did President Zelensky behave so arrogantly?

Scott Bessent:

This may be related to his background. He comes from an acting background and can be seen as a performer to some extent. He shows bravery under immense pressure, but the advisors around him do not always give him the best advice, which may lead to his inappropriate behavior.

An important aspect of the agreement is to ensure that funds flow to the American people and the Ukrainian people, rather than being siphoned off by corrupt individuals. We hope this agreement can create a win-win situation while showing Russia that American support is based on economic cooperation rather than mere aid, which will encourage Russia to engage in negotiations.

Trump Administration's Economic Messaging

Tucker:

What do you think about the recent tariff announcement? The content of this announcement is completely different from the economic policies we have been accustomed to since childhood, and regardless of how many supporters there are, this is a brand new approach that makes many people uneasy. What do you think about the recent tariff announcement? The content of this announcement is completely different from the economic policies we have been accustomed to since childhood, and regardless of how many supporters there are, this is a brand new approach that makes many people uneasy.

Scott Bessent:

We strictly followed President Trump's instructions. We held a meeting on the morning of the tariff announcement, and then after the press conference in the Rose Garden, we held another meeting before starting to communicate with the media. It is well known that the president himself is the best spokesperson; no one can convey the message better than he can. After that, each of us would work around his vision. We believe this is the purpose of our existence. If someone disagrees with this, then they are not suited to stay on this team.

Tucker:

Was there any consideration, for example, to arrange for certain people to reassure market investors and bond buyers, avoiding those who might cause market panic to discuss policy? Was there such a strategy?

Scott Bessent:

I must clarify that regarding dollar policy, the only people the market should listen to are President Trump and myself. We are the only ones qualified to represent the U.S. government in discussing dollar policy. We did indeed adopt a strong dollar policy and are putting all necessary resources into ensuring the dollar remains stable and strong in the long term. Of course, in the short term, the dollar's performance on Bloomberg terminals may fluctuate.

Bilateral transactions between the dollar and the Mexican peso or yen may experience volatility, which is normal. This is also an area I have focused on throughout my career, and I am pleased to see these fluctuations. However, in the long term, if we can establish a solid economic foundation and implement this transformative economic plan, then the dollar will perform well, and the American people will benefit as a result.

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