Economy

Scott Bessent: Tariffs Won’t Fuel Inflation, But Wasteful Spending Will

Published

February 14, 2025

Treasury Secretary Scott Bessent recently sat down for an exclusive interview following his trip to Ukraine. He addressed key economic concerns, including tariffs, inflation, government accountability, and the future of the IRS. His insights provided a glimpse into how the Trump administration plans to reshape economic policy.

The Impact of Tariffs on Inflation

Bessent dismissed concerns that raising tariffs would drive inflation higher, arguing that multiple factors offset potential price increases.

“The ultimate transitory hit is if prices go up, and I’m not sure they will,” Bessent said. He explained that a large portion of any cost increase is absorbed by currency adjustments and foreign producers. Even if prices see a slight rise, he assured that Trump’s policies—such as lowering energy costs and deregulation—would lead to an overall decline in inflation.

When questioned about potential retaliation from allies, Bessent pushed back against the notion that only China should face trade restrictions. “China is the most unbalanced economy in the history of the world,” he stated. However, he also noted that European allies benefit from trade imbalances at the expense of American industries.

“What is wrong with reciprocal tariffs?” Bessent asked. “If they have a tariff, we’ll match it. If they take it to zero, we will too.” He also pointed to non-tariff barriers, such as regulations that prevent U.S. products from competing fairly in foreign markets. “These are just as pernicious,” he said, citing examples like local content requirements that limit American exports.

Tackling Government Waste and Fraud

Elon Musk recently claimed that eliminating waste, fraud, and abuse could save the government up to $1 trillion. Bessent agreed, stating that past attempts to cut waste had failed, but the Trump administration would succeed this time.

“We are going to see real reductions,” Bessent asserted. “We’re going to see accountability and traceability—Washington is not used to this.” He highlighted how the newly established commission under President Trump would expose wasteful spending and inefficiencies.

Bessent also raised concerns about a federal judge’s ruling that temporarily barred the Treasury Department from examining certain financial records. He described the injunction as an extreme overreach, noting that it even prevented the Treasury Secretary from accessing critical data for a few days.

“That’s how out of control this has become,” Bessent said. “President Trump has ordered accountability, and based on the pushback, we know we’re making an impact.”

The Future of the IRS and AI’s Role

Bessent outlined a vision for modernizing the Internal Revenue Service, suggesting that artificial intelligence could streamline operations.

“The IRS currently runs 12 different IT systems on COBOL, a language I learned to program in the ‘80s,” he explained. “We’re going to do a major IT upgrade, and then we’ll see where that takes us.”

While he didn’t advocate for eliminating the IRS, he emphasized three priorities: improving collections, enhancing privacy, and upgrading customer service. “No one thinks the IRS is operating efficiently,” Bessent stated. “It’s time to change that.”

Ukraine, Accountability, and America First

Bessent also discussed his recent trip to Ukraine, where he was sent by President Trump to assess the financial situation and economic partnerships. He made it clear that while the U.S. supports Ukraine, accountability is a priority.

“We expect accountability, but we also want to be partners in the postwar economy,” he explained. “There will be opportunities for American businesses in energy, strategic minerals, and state-owned enterprises.”

Reinforcing the administration’s “America First” policy, Bessent stated, “We are making sure that value is created for the American people.”

Moving Forward with Economic Reform

Bessent’s remarks signaled a strong commitment to economic reform through fair trade policies, government efficiency, and financial accountability. Whether through tariffs, budget oversight, or IRS modernization, the administration is focused on maximizing value for American taxpayers while ensuring that allies and competitors alike contribute their fair share.

With a renewed emphasis on cutting government waste and reinforcing U.S. economic strength, Bessent’s message was clear: the Trump administration is taking decisive action to protect American interests and drive long-term prosperity.