WHEN: Today, Friday, March 7, 2025
WHERE: CNBC’s “Squawk Box”
Following is the unofficial transcript of a CNBC interview with United States Treasury Secretary Scott Bessent on CNBC’s “Squawk Box” (M-F, 6AM-9AM ET) today, Friday, March 7. Following are links to video on CNBC.com: https://www.cnbc.com/video/2025/03/07/treasury-sec-bessent-president-trump-is-committed-to-policies-that-will-lead-to-a-strong-dollar.html, https://www.cnbc.com/video/2025/03/07/treasury-secretary-scott-bessent-we-have-let-china-export-their-economic-system-to-us.html and https://www.cnbc.com/video/2025/03/07/treasury-secretary-scott-bessent-im-a-big-proponent-of-u-s-taking-the-worldwide-lead-in-crypto.html.
All references must be sourced to CNBC.
JOE KERNEN: Now to our headline guest of the morning, Treasury Secretary Scott Bessent. It’s great to have you here. Great to have you on the set. So I think in general, people will call this what we’re doing kind of a radical departure, I think from decades of what we’ve seen as far as our global trade policy. We’re as a leader of the free market world, we have always been eschewed these tariffs etc., I think. Can you just make the case that when we come out on the other side of this, we’re going to say wow, it was really, really worth it. I think you started to do that yesterday. You started to talk about what that looks like. Can you fill in some of the blanks on how you see this playing out?
TREASURY SECRETARY SCOTT BESSENT: Sure Joe, and I don’t think it’s a radical change. It’s just a much-needed course adjustment. And when we go back and look at what’s happened, there’s a new paper out called the China Shock, and it talks about what happened post 2004 that some of the communities recovered, but the workers never recovered and that it was much more devastating the on a human level. And what we are trying to do is make free trade fair trade because the trading systems have become incredibly imbalanced. You see it with these gigantic the trade deficits that we run. You see it with the big surpluses that other countries are accumulating. So we’re going through, we’re looking at tariff barriers, non-tariff barriers, currency manipulation, government subsidies, and in the E.U. some of these gigantic fines that they’re putting on our tech companies just because they see a big pool of capital. And you know, we’re going to push back on those. And at the end of the day, President Trump’s been saying, tariff is his favorite word. I think reciprocal may be his second favorite word. And we’re going to put this at the feet of our trading partners on April 2nd. We’re going to come out, talk about who’s a good actor, who’s a bad actor, to what degree they have put up barriers against us. And it’ll be a choice either they can drop the, all the market manipulation and things like that that they’ve done that have hurt American workers. And if they do that, then we could have more frictionless trade or we’ll put up the tariff wall, we’ll collect a lot of money and we will make the system fairer.
KERNEN: A couple of things. I think you’ve made the point that unlike the printing of too much fiat currency which might be an underlying cause of inflation, the tariffs don’t cause long-term inflation. They could cause some price increases but not long-term but then at the same time you said that Americans don’t necessarily just want everything to be really cheap. They want our workers to be employed here and that the prosperity here doesn’t mean being able to buy cheap goods. It means being able to live the American dream through having a job and having a future, etc. So we’re going to have higher input costs forever.
BESSENT: So what higher input costs forever? No, it’s the tariffs are a one-time price adjustment and everything else the administration is doing, we’re not getting much credit. As of yesterday, energy prices were down 15%. Crude was down 15% since inauguration day. 10-year rates are down, mortgages are down. The spreads between the 10-year rate and mortgages have come in. So we saw housing, we saw mortgage applications pop up last week. I think if we can keep on that trajectory. And Joe, the American dream is to be able to buy a house. We can’t import houses—
KERNEN: This could all be a reflection of the economy slowing down.
ANDREW ROSS SORKIN: As an investor who used to spend their day investing in all this stuff, do you look at the 10-year, do you look at all the signs you just talked about, WTI and everything else and say that is the work of the government and a newfound confidence in what’s happening to the economy or that’s actually a concern about what’s going to happen to the economy?
BESSENT: Well, I think it’s both because we could have the worst of all worlds because look — and I’m not new to this, when I was on your show last time. I’ve been saying it for six or nine months. I believe that the Biden administration and it’s back to Joe’s question on working Americans. What is the American dream? But the Biden administration created this bad equilibrium where the top 10% people in this room, probably most of the people watching this show, top 10% of Americans are 40% or 50% of consumption and that is an unstable equilibrium. The bottom 50% of working Americans have gotten killed. We are trying to address that. We’re trying to get rates down and could we be seeing that this economy that we inherited starting to roll a bit? Sure, and look, there’s going to be a natural adjustment as we move away from public spending to private spending. The market and the economy have just become hooked and we’ve become addicted to this government spending and there’s going to be a detox period. There’s going to be a detox period.
BECKY QUICK: You know, I think that temporary pain that you’ve acknowledged, that the President has acknowledged. I think the question becomes is temporary pain the new transitory inflation? How do you know that we get to the other side of this and how long do you think it actually takes?
BESSENT: Well, look, there’s an adjustment. We’ll see whether there’s pain. What we are trying to do, I talked about it at the Economic Club of New York yesterday. We are trying to transition from public to private. I talked about we are going to have safe and sound regulation to get our banking system going again. So the banks should be generating loans to private companies. Employment should be from private companies, not from government. And you know, I’m confident if we have the right policies, it’ll be a very smooth transition.
SORKIN: Let me ask you this. I was with a whole bunch of CEOs last night and they were talking about investing in the United States, a question about bringing manufacturing back here, what the tariffs would do. And there’s sort of a very interesting, almost behavioral science question, which is how long do the tariffs either have to be in place or do people have to believe that they are there and permanent forever before the companies decide, OK, actually we are going to invest, knowing or thinking that maybe they’re actually going to come off later? How do you think about that?
BESSENT: Well, look, I think that most CEOs, and tariff is kind of the word of the moment, but I actually think what is going to determine the corporate behavior is going to be do we have good tax policy? Can we make the Tax Cuts and Job Act permanent? Are we creating energy securities so that they have the access to cheap energy? Are we going to deregulate, which is another big story of what happened the past four years.
KERNEN: The rationale for tariffs, it’s jumped around a little bit. And I can give you, I wrote a few down. Fentanyl is why we’re doing this, I guess, currently with Mexico and Canada. And there’s been—
BESSENT: And China.
KERNEN: And China.
BESSENT: They supply the precursor ingredients for fentanyl.
KERNEN: Reciprocal trades, you even have some of the skeptics kind of go, well, that makes some sense. Want to bring in domestic manufacturing, obviously what you’ve talked about. Trade deficits, do you view those as inherently bad? I know the President always points to that, but we do consume and we’re always going to consume more than the rest of the world. And if you do indeed want a strong dollar, it seems like it’s something we’re going to have to live with. A couple of other ones, punishing bad behavior, security concerns with China. That’s a whole slew of reasons to put on tariffs. And it just, at this point, I guess critics would say it looks a little haphazard. The way they go on, they come off. We talked to Mexico and Canada. OK, we talked to the automakers. They don’t want us to do it, so we’re not going to do it. It just seems like it’s being levied in a somewhat haphazard way. Is that not fair?
BESSENT: Of course, it’s not fair, Joe. But that’s what you all do.
KERNEN: Not all.
BESSENT: Look, it’s not linear. It’s an organic process. But if we were to look back to a similar process over, well, President Trump’s talked about it in his first administration. He talked about it in the campaign trail. He’s talked about it since November is the need for Europeans to fund their own defense. And you just had a very long conversation with the past guest, and that all of a sudden, voila, this week, this week, after 25 years of baiting and cajoling, President Trump achieved what five other presidents couldn’t achieve. The Europeans are going to up their defense spending. The German debt break is coming off. That was not a linear process. That was not always an attractive process. But now the Europeans say that they are going to pay their fair share.
KERNEN: I mean, this could all make sense in terms of the art of the deal. I mean, I could see it working, but I could also see it not lasting months or even years, the tariffs. I could see, because it does seem near term, it could be disruptive to the stock market. It could be disruptive to the bond market. It could be disruptive to the economy and to jobs and everything else. But if there’s a method to it where, you know, maybe they don’t go on April 2nd. If the President gets what he wants, are we necessarily going to be in a tariff world for the next four years?
BESSENT: Well, look, I think some level of tariffs are going to be necessary, just given—
KERNEN: Long-term.
BESSENT: Well, we’ll see long-term, but just given the level of imbalances. And the other thing, too, is if we take China, China is the most imbalanced, unbalanced economy in modern times. They have a very different economic system than we have, and we have let them export their economic system to us, which has resulted in lower wages, loss of the manufacturing base. You know, one very good example would be, you know, as you could see, President Trump is scouring the earth to make sure that we have our strategic and critical minerals. That’s great. But 85% of the refining of those and processing happens in China. Every time a Western company sets up a processing firm, Chinese competitors drop their prices and put them out of business, so —
SORKIN: How connected to, in your mind, are the tariffs to the later conversation you’re going to be having this year around taxes? Meaning that you need the tariffs to deal with certain budgetary issues. And then, of course, the question’s going to be what the tax piece looks like. And then, of course, the next question’s going to be whether the tariffs then stay on to capture whatever savings you’re trying to get so that you can make the budget work.
BESSENT: Right. So, Andrew, on, yeah, I was in the investment business for 35 years, I thought I understood how crazy CBO scoring is. And now that I’m on the other side of the wall, I can tell you it’s really crazy. And very unlikely that we are going to get any credit in the CBO scoring for tariffs. But if you look back, the China tariffs, which the Biden administration has kept on, has brought in hundreds of billions of dollars. And, you know, so we will be able to, those are going to continue, likely go up. And then we’ll see what the other levels are. But in terms of the actual budget negotiation, tariffs won’t be part of the pay-fors. They will be, it will be something that’s in the background.
QUICK: I think people wonder, you’ve laid out a whole lot of reasons why there’s unfair trade around the globe. But I think people wonder with why start with Canada and maybe even Mexico first. Just the idea that they tend to be better trading partners. We had former U.S. Ambassador Bruce Heyman, the U.S. Ambassador to Canada, heard earlier this week. He said, you guys went after those three because that’s where the money is. Because he thinks it is going to be used. It’s money you need. You need to be able to show and start bringing that money in. And that’s why them first.
BESSENT: Yeah. No, the reason it’s first is because of the fentanyl crisis. That, you know, I’d have to vigorously disagree with Ambassador Heyman. That it’s the fentanyl crisis on the southern border, on the northern border, and all these precursor drugs from China.
KERNEN: The, I call it a radical departure. Maybe it’s not really a radical departure. I want to talk about the dollar and wonder whether there’s the slightest crack in what we’ve had from every Treasury Secretary. I mean, we always ask them the same thing. Over the years, I’ve been here so long, been through so many Treasury Secretaries, I’ve never heard a Treasury Secretary say that they’re not for a strong dollar. But a weak dollar would really be an answer to a lot of what you’re talking about here in terms of trade deficits, in terms of we know what, a weaker dollar does for future obligations that we have with $37 trillion in debt. That makes it a little easier. Lower interest rates implies probably a weaker dollar. Would you accommodate a weaker dollar at all? Is there any motivation at all to let that happen? Or do we have the strongest dollar policy that we’ve ever had?
BESSENT: Joe, there’s no change in the strong dollar policy. But I can tell you, when you think, what is, what does a strong dollar mean? There’s the Bloomberg Currency Index and the dollar’s very strong on that. Then there are bilateral trading relationships and is the dollar strong or weak on that? And is it strong because of U.S. fundamentals? And I can tell you, we are committed, this administration, President Trump, are committed to the policies that will lead to a strong dollar. If we bring back more manufacturing, if we have cheap energy, good tax policy, deregulate, we will end up with a strong dollar. But what is unacceptable is, in a bilateral relationship, other countries trying to weaken their currency. And so we are against the, excuse me, currency manipulation on a bilateral basis. But globally, the strong dollar is very important. We will continue as a reserve asset. And I think anyone who has an inclination that this administration thinks differently on that is wrong.
KERNEN: As far as the President paying attention to the stock market or the equities market or not paying attention, we, in the past, we’ve thought that that is how President Trump, at some point, gauges his success as president. Now, he doesn’t need to be reelected this time in four years. The market’s been up 20% in the last two years, obviously. So is there any perception with him that he’s playing with some house money? He said that at one point in the past. And I guess what I’m getting to is, how long or what type of levels on the S&P do you think you would need to see where he might, that might influence some of his policy-making decisions?
BESSENT: Yeah, look, President Trump takes in, you know, a lot of, a lot of the information every day, and the stock market’s part of it, that, again, as somebody who was on the other side for a long time, and you say, you know, where does the Trump put kick in? There is no Trump put? Well, there’s no put that, you know, the Trump call on the upside is, if we have good policies, then the markets will go up.
QUICK: He says he’s not watching the stock market very closely. Are you?
BESSENT: I watch everything but and –
KERNEN: OK, what’s the best put? I mean, you are going, you know how the media covers things, and we’re down 6% on the S&P. From what you read on a daily basis, it feels like we’re down 60 at times, although the NASDAQ is down in correction territory at this point. I’m just wondering what, if we ever went down 20% on the NASDAQ or 15% on the S&P, with people that want Trump to fail, that’s going to be displayed across every newspaper in the world. I’m just wondering whether the tolerance for something like that for the administration.
BESSENT: Well, look, as you said, Joe, the market was up 20% last year.
KERNEN: Right.
BESSENT: 20%–
KERNEN: So there is some house money.
BESSENT: No, no, no. I’m going to put it another way.
KERNEN: OK.
BESSENT: Did the Biden administration succeed? The American people weren’t buying it just because the market was up. They voted out, they voted out the Democrats.
SORKIN: A question related to the regulatory or deregulatory agenda, which I think is part of what you’re arguing on a long-term basis is going to help the economy. There’s two things that I’m fascinated by. One is that it sounds like the FTC, at least, and the administration is thinking of trying to extend or at least be very similar to what the Biden agenda was before. I don’t know that was some of the commentary about what the next version of regulations looked like, which surprised me. The second thing that I was surprised by was actually mergers and acquisitions activity in the month of January, which I would have thought would have been up, but actually was down 30% as if January was back in 2015 and what that says about the confidence to the extent that you believe that M&A activity is a barometer of confidence.
BESSENT: Well, Andrew, MAGA doesn’t stand for Make M&A Great Again, but I think that again, with deregulation, with the more thoughtful oversight at the FTC, and I think the two new leaders at the top are very thoughtful, that we will see a pickup in corporate activity. I think what we’ve seen over the past 60 days or the past six weeks since President Trump’s been in doesn’t tell us very much, and again, what will we have seen? I’ve been meeting with a lot of banking heads, investment bank heads. And you know, I think that things are going to loosen up.
QUICK: Mr. Secretary, can we just talk a little bit about the Democrats got voted out in spite of the big run-ups in the market, and I think a lot of that was because of inflation and because what average Americans were feeling at the grocery store, at the price at the pump, what they were paying for insurance, what they were paying for housing and rent. We did hear from a lot of CEOs this week who said that the tariffs could lead to price hikes almost immediately, this week and next week. The CEO of Target talking about prices for fruits and vegetables that we rely on so heavily on Mexico this time of year. Best Buy saying that they would see price hikes that would go into electronics. Automakers saying you could see price hikes pretty significantly by next week even. I just wonder how much tolerance you think there is from the American people. You’re trying to help the bottom 50% of workers. They feel those inflationary prices and it hits home a lot harder.
BESSENT: Well, Becky, we’ll see how the overall inflation numbers work out. Obviously, energy’s a big component, so we’ll see that go down. Committee to Unleash Prosperity Steve Moore’s group has some very good data on how regulation affected the average household. So, if we’re cutting that — so that’s why I keep urging people to look across the entire spectrum if you get a one-time price adjustment. And the other thing too is, are we going to for the bottom 50% of wage earners, can we see real income gains for working Americans because I think that was the problem last time that the top 10% did great and the bottom 50% got crushed. So, if they start seeing real wage gains because the private sector as opposed to the government’s producing the jobs then I think that would be a big offset.
KERNEN: The other night the President Trump said that he wanted to balance the budget as well so we’re going to have the big beautiful bill eventually maybe and I guess the 2017 tax cuts would you like to see those extended permanently at this point if you add in where I’m getting to, if you add in a lot of the other tax on tips, no tax on Social Security, add it all in, you’re not going to get anywhere near a balanced budget unless there’s some cuts. I don’t know whether DOGE does it. What about Medicaid? At this point it’s, it is the one, I don’t know if you want to call it an entitlement, but it’s been growing outpacing Medicare, outpacing Social Security. And it may not be doing what it was designed to do at this point, it’s doing a lot more at least states have tried to get it to do a lot more, is any Medicaid cut on the table?
BESSENT: Well, I don’t know if it has to be a cut but certainly—
KERNEN: Slowdown in the increases?
BESSENT: Slowdown in the increases or just looking at the system and that empowering states. We had a governor’s conference two weeks ago at the White House and a lot of the states would prefer to do it themselves. And you know, I’m sitting in the most prolific state for the Medicaid and New York, Illinois, Chicago are big spenders, so could more states get more money? Some states have to rein in the overspending, sure.
KERNEN: What else would get us anywhere near a balanced budget if we have all these tax cuts that have been—
BESSENT: Well, growth. If we change the growth trajectory. Again, I was telling Andrew that when I was on this side of the wall with CBO, I think it doesn’t hit anyone. Like, the CBO scoring assumes 1.7, 1.8% growth linearly. So if you hike taxes, growth doesn’t move. If you cut taxes, growth doesn’t move. So, I think if we make the current tax regime permanent, then we will grow if we deregulate as we’re planning to do, and if we reindustrialize.
QUICK: Is that a precursor for saying we’re not going to look at the numbers, or you’re not going to look at the numbers from what the CBO says in terms of what the budget’s going to look like? It may not look balanced according to their numbers, but it may be something that you guys say, forget it, we’re not paying attention to that.
BESSENT: Well, if someone were always wrong, would you look at the numbers? I think there were a trillion and a half off in the last scoring.
QUICK: Yeah.
KERNEN: You had your meeting with President Zelenskyy, and we’ve talked about this. I don’t know whether you’re Treasury Secretary of State, I don’t know. I think you’re a little bit of all those things. And—
BESSENT: I’m 100% Treasury Secretary.
KERNEN: I know, but you were over there. And I just want to get a feeling because was that last Friday? Was that one that—
BESSENT: The meeting was last Friday, yeah.
KERNEN: So there have been disruptions in maybe the way we approach global trade and also maybe what our allies think of this in terms of security across Europe, the Russia-Ukraine situation. I wanted to get your comments. Did you think he was going to sign? Were you under the impression that when you were there that the deal was done and he was going to sign?
QUICK: Zelenskyy.
KERNEN: Zelenskyy. And did you, were you treated badly? Can you give us an idea of behind the scenes, what happened in that meeting?
BESSENT: In Kyiv?
KERNEN: Yes, yeah.
BESSENT: So I thought it was very important for me to go to Kyiv and speak with President Zelenskyy in-person in his office. We had a vigorous discussion for 45 minutes or an hour. He did not want to sign the economic partnership agreement there. I explained to him that the purpose of the agreement was to bring the Ukrainian people closer to the U.S. people, that we wanted part of President Trump’s peace plan was to show no daylight, no daylight between Ukraine and the U.S. So he did not want, he chose not to sign the deal that day. I asked him, I said, “We’re going to go out there. There are 50 reporters. What do you want to say?” And he said, “I am going to tell them that I will sign in Munich.” He was meeting with Vice President Vance and Secretary Rubio. He didn’t sign the deal in Munich. So then the Ukrainians requested to come to the White House and wanted to sign the deal.
SORKIN: And what do you think was going on, though, in his mind? You think he was pushing this out because he thought he could get a better deal? He thought that was punitive? What was he—
BESSENT: I think he has this recursive loop of these two words, security and guarantee, security, guarantee. And the security guarantee is twofold. One, that as the U.S. has more of an economic stake in Ukraine and the success of the future of Ukraine, because I tell you, like this deal, there is nothing for the U.S. if the Ukrainian economy doesn’t succeed. So there’s an implicit economic security guarantee. And prior to his visit on Friday, President Trump had hosted President Macron of France, Prime Minister Starmer of the U.K. These were fantastic meetings. The European leadership, to the extent they are the European leadership, was on board with a plan for the Europeans to provide troops on the ground the security guarantee without Americans. The American troops and the NATO backstop starts at the Polish border. And President Zelenskyy kept pushing for this security guarantee. But I tell you, this was one of the most epic on-goals in diplomatic history. All he had to do, come in the White House, have a press conference. We were having a private lunch. If he wanted to try to renegotiate, that would have been the place to do it. Not on worldwide TV. And then we were going to go sign the deal.
QUICK: He says he’ll sign it now. Where do things stand? What’s going on behind this?
BESSENT: We’re going to have to see. The sequencing was supposed to be economic deal. And then, again, move the Ukrainians closer to the American people. Get the confidence of the American people that their money is being spent wisely. And then go and negotiate in a stronger position with Vladimir Putin. So now, I think, after President Zelenskyy’s performance last Friday, we’re going to have to see that he is in favor of a peace deal.
SORKIN: Can I ask you a question just about Russia? And we were talking to Michelle Caruso-Cabrera earlier. Do you imagine, over the next couple of years, that American businesses will return to Russia as part of whatever ultimately happens here?
BESSENT: Andrew, again, the situation is very fluid. And everyone is going to jump into the next thing. That there is definitely a peace deal. President Trump wants a peace deal. He is working hard and he acknowledges that you have to speak to both sides. And, look, he is behind the scenes. He is negotiating just as hard with President Putin. But you can’t negotiate with him if you don’t speak to him.
KERNEN: Given what happened with you in Kyiv and then with what you said was going to happen in Munich, I would think that maybe the President and the Vice President, that didn’t occur in a vacuum, what finally happened last Friday. I mean, they knew full well what had been, what had transpired at that point. Does that explain maybe how things went sideways so quickly?
BESSENT: No. Look, I—
KERNEN: Were you treated well in Kyiv? I heard it was a dark room, that he was, I don’t know, there was some arrogance.
BESSENT: Look, I think President Zelenskyy, understandably, is under a lot of pressure.
KERNEN: No doubt.
BESSENT: A lot of pressure. Because I can tell you, in his office, the whole building is dark. And there are sandbags in the building because they’re afraid of a drone getting in the building.
KERNEN: It’s all security.
BESSENT: Yeah. So, I mean, you think you have a lot of security in Times Square. And but he, I think, has to acknowledge that the security guarantee is coming from the Europeans.
QUICK: Have you spoken to him since?
BESSENT: Sorry?
QUICK: Have you spoken to him since, President Zelenskyy?
BESSENT: When he came to the Oval, sure.
QUICK: No, I mean, have you spoken to him since last Friday?
BESSENT: Well, I don’t speak with President Zelenskyy. And I have not been in touch with my counterpart, the Finance Minister.
KERNEN: 100% treasurer, I think.
BESSENT: 100%.
KERNEN: Although you just gave a pretty good summary—
BESSENT: All treasury, all the time.
KERNEN: Of what went on. Isn’t being in business with Ukraine, in the mineral business, isn’t, is there an implied security there? Does Russia not understand that there’s an implied security arrangement there with the United States?
BESSENT: Joe, so it’s not only a mineral deal. It’s an energy deal. And it’s an infrastructure deal. And my view of what do the Russians think about this is, so to get to Kyiv, you fly to Poland, take a 10-hour night train in.
KERNEN: Yeah.
BESSENT: That four hours before I arrived, for the first time since November, the Russians bombed Kyiv. So I believe one person died, four were injured, including two children. And so I believe that that’s what the Russians think of this deal. They don’t like it.
KERNEN: Yeah.
SORKIN: Let me ask you just a different question. Maybe this is a political question or a philosophical question. There are some critics of what we’re doing as it relates to minerals with Ukraine. Who say, you know what, the work that the U.S. has done with Ukraine was done on behalf of democracy. Was done as a gift. That it wasn’t a quid pro quo for some kind of economic situation. And it wasn’t something that, you know, I don’t know if, I don’t know if you believe that the terms of whatever the deal are too tough on Ukraine. But what do you say to those people who say, you know what, we’ve gotten a benefit by supporting Ukraine thus far. Even without genuine economics this way.
BESSENT: Well, I would tell them to look at the deal, which most people haven’t seen, can’t see yet. And let me tell you what the deal is not. It’s not one of these rapacious Chinese deals where we come in, we don’t have any mineral rights. We don’t have any, this is an economic development deal. So this is, to the extent I’ve said a lot. I said in my speech at the Economic Club of New York yesterday, economic security is national security. We want to help Ukrainians succeed economically. You know, Poland, which sits next door to Ukraine. Poland and Ukraine, when the iron curtain came down, had the same size economies. Poland is three and a half or four times bigger now. And I’ll tell you who doesn’t like this deal is the Ukrainian oligarchs who tend to have their hand in the till. So we want to make sure that the money goes to the Ukrainian people.
SORKIN: Right.
KERNEN: You’ve got to be able to talk about everything, Scott. OK, Bitcoin, the reserve. Supposedly there is disappointment that we’re not going to be buying Bitcoin outright using taxpayer dollars. But if we can do it in a, in a revenue neutral way, we would. Number one, were you a proponent for the reserve? And two, is there a way to buy Bitcoin, not just acquire it through, I don’t know, however we’ve gotten these $17 billion worth at this point?
BESSENT: Yeah. So, Joe, I am a big proponent of the U.S. taking the worldwide lead in crypto. I think we have to bring it onshore and use our best practices and regulation. I think that the Bitcoin reserve, before you can accumulate it, you have to stop selling it. So what we have now is from a seized asset pool. And I wasn’t there when it happened, but I believe what happened was about $500 million of Bitcoin was seized. Half of it was sold. And what we have now that, say, it’s over $10 billion, $10 billion, $12 billion, that’s all through appreciation. So the first thing to do is to put, is to stop the selling. So we are going to, after the victims are paid and all of that, we will, any seized assets will go into this reserve. And then, you know, we’ll see what the way forward is for more acquisitions for the reserves. And, you know, we’re starting with Bitcoin, but it’s an overall crypto reserve.
SORKIN: So how do you think about buying, though? And how should taxpayers think about that? Because effectively, we’ll be levering ourselves to some degree, given that we don’t have a surplus of money right now, to make these investments.
BESSENT: So that’s why the first step is to stop selling. And then we’re going to put a plan in place from there. So we’re having this crypto summit. I’m going back to Washington this afternoon, and then we’ll talk about the way forward.
QUICK: Can I just ask you about the IRS? It’s the largest bureau of the Treasury Department, and DOGE has come up with a plan to cut about half of the 90,000 workers there, about 45,000. The President was very clear this week that it’s the secretaries who run the departments, not DOGE. I just wonder if you agree with a cut of that size, particularly when there have been points raised and studies done that suggest that for every dollar that the IRS spends on enforcement and trying to go after bringing in revenue brings in about $5 to $12.
BESSENT: Yeah, I’m not sure where this cutting half the employees came from.
QUICK: Yeah.
BESSENT: What we did was, there were 15,000 new employees. We did an evaluation. We kept about half. The ones that, Becky, to your point, were deemed essential to collections. Somehow the other 7,000 in the United States of America collected taxes for 250 years without them. And, look, this is playoff season for us. Game day is April 15th, and I have three priorities with the IRS, the collections, privacy, and customer service in that order. So there’s nothing, nothing I’m going to do to hurt the collections. Over time, we are in the midst of this great AI boom, and you know, I think increasing headcount now would be just the wrong time as the private corporations are moving into AI. And, you know, I can’t think of a better application for AI than auditing tax returns.
QUICK: How are tax returns this year so far?
BESSENT: We don’t have the data. You know, about the other thing, too, is when you ask about physical employees, 90% of the filing is now done online.
QUICK: Yeah.
KERNEN: I guess we started with tariffs, maybe we should, we should maybe end with tariffs. And there’s a piece in the Journal today about the president’s ability constitutionally to levy tariffs and that he has invoked some emergency powers in the fentanyl case to do it. But the Journal is basically questioning whether, if you don’t use fentanyl as a reason, that whether a U.S. president can unilaterally levy tariffs. Do you have a view on that?
BESSENT: Well, Joe, if you want, I could geek out for you. So, the—
KERNEN: Oh, I would love that. Yeah, we love geeks.
BESSENT: It’s my, it’s my natural habitat. So we, what you’re seeing now, the tariffs based on the fentanyl at the border, is something called IEEPA. That’s an emergency statute. But there are 301s, there are 232s. There’s a whole range of actions. Jamieson Greer just came in, was confirmed last week as USTR. He has a lot of experience and deep knowledge of the legalities. I am sure that he will be by the book. I think that there were 4,000 legal challenges to President Trump’s tariffs last time that withstood the test of time. So, yes, it’s not, the administration doesn’t have the ability to say, let there be tariffs. But everything we do is based on a specific rule of law that we will invoke.
KERNEN: Every time you finish something, I’m thinking about something else that I want to ask you. I don’t know where Alex is. But can I ask, can we go a little bit longer?
BESSENT: Fine.
KERNEN: Really? All right. Well, the show’s over at 9:00. I don’t know if—
BESSENT: I’ve got to get to the crypto summit.
KERNEN: China, would you ever say that, that we’re ready for a trade war? We’re ready for any kind of war? I thought that was a little bit strange to hear that coming from China. And I guess where I’m going is, in a perfect world, if we could be rivals in terms of business with China, but loyal trading partners, or at least trading partners, it would benefit both countries. Does the President want to get there eventually with China?
BESSENT: Well, look, I think he wants to get to fair trading. And we’re a long way off. And, again, I will point to, look how he has gotten the Europeans to finally pay their fair share on the global defense budget for the Western alliance. So can we, China needs to rebalance. So they have been exporting their economic practices to us. Can we use tariffs to push back against that and force a, or encourage a rebalancing, which almost every economist believes needs to happen? And so the China relationship is very complicated. Because in the past, our economic partners, our biggest economic partners were also our allies. We are now military rivals with China and economic rivals. So it’s very tough to disaggregate that. So are they using their big surpluses to build up for this big military buildup? The answer is yes. Could they tone down their military ambitions? Maybe. But, again, I like to stay in my economics lane. And there’s a lot to do there in terms of to get to fair trade. And, again, that I would say that anyone who is commenting on this doesn’t understand that the surplus country, the surplus country is the one who will see the most problems in a trade war. The deficit country will do better.
KERNEN: You seem very comfortable talking about security. You and Rubio, I think there should be like a hotline.
SORKIN: What should multinational companies who do business in China think? So I know Apple, of course, has a lot of business in China. They’ve now made a big pledge to do a lot of business in the U.S. But does that change the dynamic in terms of, will they ultimately get a carve-out on tariffs? There’s lots of other businesses that invariably do business in China as well.
BESSENT: Well, I know that Apple is diversifying their supply chain. They made a big push into India. We’ve seen Vietnam pick up as a trading partner. So we’re already seeing corporates take action. I’m on the record as saying I think the only good thing to have come out of COVID was it was a test run for what could happen if we really got into a deep economic war or the unthinkable happened and we got into a kinetic war. So everyone has realized that optimal supply chains are not reliable supply chains.
SORKIN: Do you think that President Xi will make a move on Taiwan? I asked, by the way, there were some very interesting comments by Elon Musk earlier this week where he even seemed to suggest that there was a relationship and that, you know, maybe this would actually happen sooner than later.
BESSENT: I follow President Trump’s lead, and he is confident that President Xi will not make that move during his presidency.
KERNEN: One more newsflash I think we wanted. That’s what we live for. Thank you for all the time that you gave us today, Mr. Treasury Secretary.
SORKIN: Thank you, Treasury Secretary. Good to see you.
BESSENT: Good to see you.
SORKIN: Great to see you. Thank you. Come on back, please.
BESSENT: Look forward to your book.
SORKIN: Thank you very, very much.
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