Traditional gatherings of former Treasury secretaries to welcome newly-built secretaries in a foldable manner are usually a lighthearted and enjoyable event. But when the group was convened this month, it was President Trump's “liberation day” and the tone was surprisingly serious.
The dinner, hosted by former Treasury Secretary Stephen T. Mnuchin, took place at a moment of uprising in the US economy. The president overturned global trade by punishing tariffs on both allies and enemies, with Treasury Secretary Scott Becent at the heart of the matter defending policies that many of the rooms deemed economic misconduct.
“I was feeling calm,” said 99-year-old W. Michael Blumenthal.
According to Blumenthal and others familiar with dinner, Bessent was pressed for the strategy and the impact it had on the economy behind the tariffs. Sometimes, Becent would speak up when his predecessor confronted him about Trump's approach.
“He wasn't just a smile,” recalls Blumenthal. “He's there – he has to protect it.”
Guest lists included Robert E. Rubin, Henry M. Paulson, Lawrence H. Summers, Timothy F. Geitner and Jack Lou. Former Treasury Secretary Janet L. Yellen was traveling to Australia and did not attend, a spokesman said.
The Treasury declined to comment on the dinner, and Becent declined to comment on the article.
The bumpy welcome reflected Mr. Becent's first few months, which may be Washington's most challenging task. Wall Street welcomed his appointment in the hope that he would become a voice of moderation that could soften Trump's instincts on lob spray tariffs around the world.
Bescent, now 62, is at the heart of an ugly trade war with China, where economists fear rekindling inflation and causing a global recession. By most indicators, the US economy was the strongest in the world when Trump took office in January, leading some analysts to describe the president's actions as the historic self-harm scars that a footballer scored goals against his team.
“This is one of the biggest unique goals in diplomacy, economics and trade that we think we've done so far,” says MIT economist David Autor.
Before joining the administration, Becent had expressed his own doubts about tariffs. But Trump's protectionist trade instincts are well known for being enclosed.
As the former hedge fund manager who founded Key Square Group, Bessent wrote in a letter to investors last year that he is skeptical of tariffs.
But as Treasury Secretary, Becent had to publicly stick to the administration's provocative stance. He now argues that tariffs are not inflation, but instead gives the economy a one-off “price adjustment.”
Some of his comments raise eyebrows. After China responded to Trump's tariffs by imposing higher collections on American products, Becent downplayed the potential impact on the US economy and said “yes.” In his view, the US holds the advantage as China relies on exports to the US.
Two days later, Beijing retaliated even a hard collection, escalating the economic battle with the world's largest economy, sending unrest through financial markets.
As the market has suffered the worst defeats over the years, Becent suggested that those close to retirement probably pay less attention to the lower value of nest eggs.
“I don't think Americans who want to retire now, Americans who have been cleaning up in their savings accounts for years will see the daily fluctuations in what's going on,” he said last Sunday on NBC's “Meet the Press.”
The Democratic National Committee noted that the stock market was being tanked based on Bescent's comment that the economy was in “very good.”
Mr. Becent has entered a somewhat offensive position given the administration's trade agenda is more aggressive than most experts expected.
Trump has imposed tariffs on almost every country, including a tax of at least 145% on Chinese imports. The move caused stocks to plummet, straining the bond market, and economists increased the odds of the recession.
Top Republican lawmakers, including Sen. Ted Cruz of Texas, are also opposed to tariffs. In his latest episode of his podcast, Cruz warned that tariffs are taxes on consumers.
“It's terrible for America,” he said. “This would destroy jobs at home and damage the US economy if there are tariffs everywhere.”
Bescent was able to ease Trump's approach to some extent. When he traveled to Mar-a-Lago to explain his volatility to the president last Sunday, Bescent convinced dozens of countries to suspend so-called mutual tariffs and begin trade talks with them. Upon his return, Mr. Becent, who claimed he was primarily focused on tax policy, said he was playing a leading role in trade talks.
On Friday evening, the administration released rules that appear to exempt smartphones, computers, semiconductors and other electronic devices from most of the Chinese president's punishment, giving tech companies such as Apple and Dell a reprieve.
But the deepening conflict with China suggested there would be more volatility as Becent engages in discussions with Trump's trade adviser Peter Navarro and Commerce Secretary Howard Lutnick, who counseled more Hawkish's approach.
“The best part is that he can be there as an advisor,” said Marlene Jupiter, who worked with Bescent when he ran through Bescent Capital. She said his deep knowledge of the market should help calm investors who are nervous about trade uncertainty, but “I don't know how much Trump will listen or not.”
The inability of the Treasury Secretary to more effectively restrain Trump has discouraged some investors.
“In the sense that I'm disappointed in Bescent, Munuchin and Corn have never gotten it before,” said Spencer T. Hakimian, founder of New York hedge fund Tolou Capital Management. Mnuchin, as Treasury Secretary and director of the National Economic Council, Gary Kohn, was the two economic advisers for Trump's first term, and warned him against overuse of tariffs.
“The reason the market was interested in Bescent is because they saw him as Mnuchin 2.0.
Mark Sobel, who worked for the Treasury for nearly 40 years, said Becent is believed to have reduced mutual tariffs, but raised questions about how he publicly justified it.
“It would be hard for Americans to see him as a reliable and serious economic spokesman given the comment that citizens should not worry about daily stock market fluctuations if the ups and downs of tariffs are much more strategic or tanking 401(k),” Sobel said.
But ultimately, the final decision on tariffs will be on Trump.
“The Secretary of the Treasury is an executive Senyomist economic officer, but the President is the captain of every team,” said R. Glenn Hubbard, former deputy secretary of the Treasury. “What the Treasury Secretary says is that he needs to be on the same page as the President.”
During dinner with Becent, the former secretary offered encouragement, advice and historical perspective amid concerns about Trump's policy, people familiar with the issue said.
In one exchange, Summers, who served in the Clinton administration, was appointed Secretary of Treasury by President Richard M. Nixon in 1972, and used the Internal Revenue Service to stand up to his bosses to reimburse the university and audit political opponents.
In a recent social media post, Summers said that if he was still in the government, he has stepped down from the analysis the Trump administration created to support tariff plans.
Blumenthal said he wants Bescent's luck with more complicated work when “the best thing is different for a country that's different from what the president wants.”
He added that traditionally welcoming meals are light to policy discussions and advice from Treasury veterans.
“This was a very special occasion,” Blumental said.
Anna Swanson Reports of contributions.
