U.S. Treasury Secretary Bessent Discusses Tariff and Tax Reduction Strategies: Market Volatility Is Merely a Temporary Adjustment Period, Other Countries Should Not Panic

As the United States prepares to implement the new “Basic Tariff and Reciprocal Tariff” system on April 9, Treasury Secretary Scott Bessent spoke this morning, April 4, about how the U.S. government is using tariffs as a bargaining chip while simultaneously advancing tax reduction proposals and fiscal consolidation in Congress. Bessent emphasized that other countries need not be anxious or retaliate; if they are willing to negotiate, the U.S. is open to discussions. He also revealed that negotiations with China have yet to commence, but issues surrounding TikTok, the renminbi, and fentanyl may come to the negotiating table.

On April 9, the new tariff system goes into effect; Bessent emphasizes there is no need to panic as this is the standard maximum

Bessent pointed out that the U.S. will first implement a 10% basic tariff, followed by different levels of reciprocal tariffs depending on each country’s situation. He stressed, “As long as you do not retaliate, this is the highest standard, and it will not go higher.” He also urged countries not to panic and refrain from rushing to counteract.

Tariffs are a negotiating tool, but negotiations are determined by Trump

When asked if the EU, China, and India have begun negotiations with the U.S., Bessent responded that there has been contact, but whether and how to negotiate will ultimately be decided by Trump. He indicated that the White House currently prefers to let the market settle for a while without rushing into negotiations.

China could face tariffs exceeding 50%, fentanyl becomes a new focal point

Regarding China, Bessent candidly stated that considering the current tax rates, currency manipulation, and fentanyl exports, the overall tariffs imposed on China by the U.S. could exceed 50%. He also refuted China’s claim that “fentanyl tariffs must be lifted to resolve the drug crisis,” stating, “The number of Americans dying from fentanyl continues to rise daily, and we cannot let China set conditions.”

TikTok and the renminbi may also come to the negotiating table

When asked if TikTok and the renminbi could be used as bargaining chips, Bessent said, “We have not yet started bilateral negotiations, but everything could be brought to the negotiating table. Tariffs are a precursor; subsequent discussions will enter a stage of restructuring U.S.-China trade relations.”

Bessent claims stock market decline is unrelated to tariffs; it is a government detox period

Regarding market reactions, Bessent calmly stated, “This stock market decline is not due to tariffs, but rather a result of the government overspending for years; we are now entering a fiscal detox period.” He emphasized the need to allow “public spending to decrease and the private sector to rise,” noting that last month alone, 10,000 manufacturing jobs were created.

Tax reform does not impose taxes on tips or Social Security, and purchasing American cars can yield tax deductions

Bessent revealed that the tax reform bill is progressing smoothly and has garnered consensus from both houses of Congress, with procedures expected to commence as early as this weekend. Key contents include:

• Tips are tax-exempt
• Social Security is tax-exempt
• Interest on purchases of “Made in America” cars can be claimed as tax deductions

This tax reform will be processed through the budget reconciliation mechanism, implemented alongside spending reduction policies.

Fiscal reform budget relies on tariffs, combined with efforts to combat waste

In response to concerns that tax cuts and subsidies might exacerbate the fiscal deficit, Bessent replied, “We rely on two avenues: first, tariff revenue, and second, internal government efforts to combat corruption and reduce spending.” He acknowledged that these revenues and savings cannot currently be included in the Congressional Budget Office (CBO) estimates, but the actual financial situation will be reflected in future financial reports.

Inflation, confidence, and corporate signals; Bessent states no real crisis has been observed

Regarding rising inflation expectations and declining consumer confidence, Bessent believes this is an emotional response rather than a substantive issue. He pointed out, “If American families were genuinely panicking, they would have already begun hoarding goods and demanding higher wages, but none of this has occurred.”

On international issues, focus will shift to sanctions against Ukraine and Iran

Bessent indicated that after tariffs and tax reforms are implemented, the Treasury will pivot towards diplomatic economic affairs:

• Ukraine Agreement: A “four-page parameters understanding agreement” is expected to be completed within two weeks, accelerating peace and reconstruction negotiations.
• Escalation of sanctions against Iran: For the first time, sanctions will be imposed on Chinese private oil refineries operating in Iran, with potential expansion in the future.

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