Trump Treasury pick is a Rorschach test, for now
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
By Gabriel Rubin
WASHINGTON, Nov 22 (Reuters Breakingviews) -President-elect Donald Trump’s pick to lead the U.S. Treasury is a relatively uncomplicated one. Scott Bessent, founder of hedge fund Key Square, isn’t the most hard-line trade warrior, nor a disciple of strict financial orthodoxy. His selection avoids a nasty shock for jittery markets while maintaining credibility among Trump-aligned politicos. Yet a safe pair of hands only helps if they restrain the next administration’s most out-of-the-box impulses.
Bessent’s Wall Street bona fides will likely be a relief to investors. A markets veteran - if one with a mixed investment track record - he fits the mold of previous leaders of the nation’s finances like Robert Rubin or Henry Paulson. While loyal to Trump’s signature agenda of trade barriers on the campaign trail, he reassured that they can be carefully deployed. “Used strategically, tariffs can increase revenue to the Treasury, encourage businesses to restore production and reduce our reliance on industrial production from strategic rivals,” Bessent wrote in a Fox News op-ed last week. Absent was a specific commitment to the 60% levies on Chinese products that Trump has floated.
That marks him as less of a hardcore tariff champion than former U.S. Trade Representative Robert Lighthizer, reported to be under consideration for the role. Picking him for Treasury would have signaled that Trump would be unbridled in his pursuit of trade war. Other mooted candidates had their own baggage. Former Federal Reserve Governor Kevin Warsh, who the Wall Street Journal reported could have held the post before succeeding central banker Jerome Powell in 2026, might have raised concerns about attempts to influence monetary policy, given the President-elect’s seeming sympathy to arguments that it should be brought under political control.
There are still worries. Bessent lauds the “Three Arrows” economic policy of late Japanese Prime Minister Shinzo Abe, which combined deregulation, fiscal stimulus, and monetary easing. While that suited the context of sclerotic growth and low interest rates, the U.S. economy today if anything risks overheating from stimulative tax cuts and inflationary tariffs. If Trump goes full-bore on both fiscal and monetary loosening, bond markets would likely react with alarm - especially if the Fed is seen as bullied along.
Tesla CEO and Trump advisor Elon Musk lamented that Bessent would be a “business-as-usual choice.” If anything, sticking to precedent at Treasury would be great, given the example set by first-term pick Steven Mnuchin: a loyal soldier who nonetheless restrains ideas that would make the U.S. business community squeamish. At least twitchy bond traders can provide an up-to-date verdict on whether Bessent fits the bill.
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CONTEXT NEWS
U.S. President-elect Donald Trump said on Nov. 22 that he will nominate hedge fund manager Scott Bessent as his Treasury Secretary.
Editing by Jonathan Guilford and Pranav Kiran
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