On Bessent and Tariffs

Bessent conducted his confirmation hearing in the Senate yesterday with grace and competence and will be easily confirmed. He revealed his top priority to be the extension of the expiring provisions of the 2017 Tax Cuts and Jobs Act. He didn’t mention tariffs until asked, and did not reveal his policy intentions. In reply to Wyden, he argued the consumers do not ultimately bear the “tax incidence” of tariffs. But if they do not, then what is to change their behavior toward favoring domestically produced goods, driving a US manufacturing renaissance envisioned by Trump, Vance and Miran? Bessent’s arguments seem to leave little room for tariffs as anything but a revenue-raising stratagem at the expense of other nations. The issues here are complex, as are the political process for implementation – as is the total context in which any tariffs might be imposed. We urge a wait-and-see approach before guessing the impacts on the economy and the markets.