The Blubber

reasury Secretary Scott Bessent delivered a forceful defense of the White House’s tariff policy on Thursday, arguing that trade policy must prioritize more than just access to cheap imports.

"Access to cheap goods is not the essence of the American Dream," Bessent said during a speech to the Economic Club of New York. "The American Dream is about prosperity, upward mobility, and economic security. For too long, the architects of multilateral trade deals have lost sight of this."

His remarks came amid market jitters over how aggressively President Donald Trump will push his trade agenda. Despite signs of movement on Mexican imports, stocks fell sharply Thursday as investors assessed the risks of Trump’s tariff policies.

Trump’s Trade Strategy: Aggressive but Intentional

Speaking before an audience of leading economists, Bessent made clear that Trump is willing to take bold steps to reshape global commerce.

"If another country’s trade practices harm our economy and our workers, the United States will respond. This is the America First Trade Policy," he declared.

Earlier in the day, Commerce Department data revealed the U.S. trade deficit surged to a record $131.4 billion in January—a 34% increase from the previous month and nearly double the level from a year ago.

"This system is not sustainable," Bessent warned.

Tariffs: Revenue, Protection, and Leverage

Economists and Wall Street analysts remain concerned that Trump’s tariffs could drive up prices and slow economic growth. However, White House officials argue that tariffs did not meaningfully contribute to inflation during Trump’s first term and could help fuel growth as businesses reshore to avoid duties.

"Across the economic spectrum, I’m not concerned about inflation," Bessent said.

He outlined three key benefits of tariffs in Trump’s economic strategy:

1. Revenue Generation – Tariffs provide a source of income as the U.S. grapples with massive fiscal deficits.
2. Industry Protection – Tariffs shield American workers and industries from unfair global trade practices.
3. Negotiation Leverage – Tariffs serve as a bargaining tool in Trump’s broader economic strategy.

"It’s the third leg of the stool," Bessent explained.

A Critical Moment for Fiscal Discipline

The event was hosted by Larry Kudlow, Trump’s former National Economic Council director. Beyond trade policy, the conversation touched on deregulation, debt, and deficits.

The U.S. budget deficit has already reached $840 billion in just the first four months of fiscal 2025, running above 6% of GDP—a level rarely seen in peacetime, especially during economic expansion.