US fiscal policy: Bessent defends tariff threats against the EU

Bessent initially praised the 90-day pause in negotiations in the tariff dispute between the EU and the US – until his boss changed his mind and unilaterally announced a doubling of tariffs on steel and aluminum imports to 50 percent. Time for negotiations until mid-July? No way.

And so Bessent had no choice but to once again adjust the US trade strategy – and attack the European trading partners.

He hopes the US President's new threats will "ignite a fire under the EU," Bessent said in an interview with Fox News. Trump is dissatisfied with the Europeans' negotiating offers: Numerous trading partners, especially many Asian states, have since offered the US far better deals. Bessent took the opportunity to once again attempt to divide the EU and discredit the negotiating team: Many EU member states have allegedly signaled that the negotiating team from Brussels "is not negotiating in the interests of the individual states," Bessent added in the Fox interview.

The US Treasury Secretary performed a similar balancing act between facts and wishful thinking with regard to Trump's tax policy and the rapidly rising US debt. The US would "always service its debts," Bessent vowed in an interview with CBS at the weekend. Previously, JPMorgan CEO Jamie Dimon , one of the most influential voices on Wall Street, had warned of new unrest in the bond markets and a possible financial crisis if the US did not finally get its high debt under control. Bessent told CBS that he had known Dimon for many years. "He has warned about this many times. But fortunately he has never been right." There will "never be" a US debt default.

US President Trump's tax cut plans (the "Big Beautiful Bill"), which primarily benefit the wealthy, will increase the US budget deficit by nearly $3 trillion, according to experts' calculations. The US national debt currently stands at more than $36 trillion, or 100 percent of economic output. The rating agency Moody's expects the US national debt to rise to $135 trillion by 2035. The major rating agencies have already downgraded the US accordingly. Confidence in the dollar has declined on the global financial market.

Just a few weeks ago, Bessent himself warned that the US government would run out of money as early as August and face a "shutdown" if the statutory debt limit was not raised again. While Trump had railed against the US's high debt during the election campaign, his legislative proposals now also call for a further increase in the debt limit—or, more precisely, a "temporary suspension" of the ceiling.

How Bessent intends to restore confidence in the dollar in light of these plans remains his secret.