US Treasury Secretary: Fed needs to be examined as an institution
Speaking on US business news channel CNBC on Monday, Bessent was asked whether he thinks President Donald Trump should fire Fed Chair Jerome Powell.
The treasury secretary said, "I think that what we need to do is examine the entire Federal Reserve institution and whether they have been successful."
Bessent has been critical of monetary policies that the Fed has implemented. His remarks are seen as an indication that the Fed policies, including those in the past, also need to be examined.
Regarding the impact of the Trump administration's tariff policy, Bessent said, "there was fear mongering over tariffs, and thus far, we have seen very little, if any, inflation."
He expressed the belief that a rate cut is possible, saying "We've had great inflation numbers."
It is rare that a US Treasury Secretary refers to the need to examine the Fed, which is supposed to be independent of the government.
Bessent was apparently trying to pressure the central bank to cut interest rates.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
NHK
12 hours ago
- NHK
US, Philippines reach trade deal with 19% tariff on Philippine exports
The United States and the Philippines reached a trade deal after their leaders met in Washington on Tuesday. It includes major concessions by Manila. US President Donald Trump shared details of the agreement on social media. He said the Philippines will open its market to the US and impose no tariffs. Meanwhile, there will be a 19 percent tariff on Philippine exports to America. Trump also said they will work together militarily. Philippine President Ferdinand Marcos Jr. told reporters he had to make concessions. These include scrapping tariffs on US automobiles and increasing imports of soy, wheat and pharmaceutical products from the country. President Marcos said they tried very hard to see what they could do. He added, "That's part of the new regime that we will be following in terms of trade with the United States." But Marcos also emphasized that he managed to confirm cooperation on security with Washington. The Philippines has been locked in a territorial dispute with Beijing in the South China Sea. "Our strongest, closest, most reliable ally has always been the United States," he said during the meeting. The US State Department later announced at least 60 million dollars in foreign assistance funding to support energy, maritime, and economic growth programs in the Philippines.
Japan Times
12 hours ago
- Japan Times
Japan and U.S. both claim win in surprise 11th-hour tariff deal
Japan and the United States reached a surprise trade deal on Tuesday in Washington after months of fruitless negotiations and some tense moments, with both sides taking victory laps and Japanese markets cheering the news. The United States is promoting it as the deal of the century. For Japan, it was a mission-accomplished moment. The agreement, the details of which are still being ironed out, includes a 15% "reciprocal" tariff on most Japanese goods and 12.5% on cars, with 50% tariffs on steel and aluminum remaining unchanged. Japan has agreed to buy more rice, improve market access and invest in a $550 billion fund that will support strategic industries and technologies in the United States. 'There has never been anything like it,' U.S. President Donald Trump wrote on Truth Social. The reciprocal tariff is 10 percentage points lower than the rate that had been scheduled to kick in on Aug. 1, while the auto tariff has been cut by half from 25%. The total for autos will now be 15%, including 2.5% duty on autos charged independent of Trump tariffs. 'I firmly believe we have achieved an agreement that protects what needs to be protected, while aligning with the national interests of both Japan and the United States,' Ryosei Akazawa, Japan's chief tariff negotiator, said Tuesday in Washington. Prime Minister Shigeru Ishiba noted that the 15% reciprocal tariff is the best rate achieved by a trade surplus country. The Nikkei 225 stock index rose 3.51% in trading Wednesday, with Toyota up 14.35% and Honda 11.15%. The yen traded steady in the ¥146 to the dollar range. Washington assured Tokyo that for strategically important goods, such as semiconductors and pharmaceutical products, tariffs for Japan will always match the best rate charged to other countries, Akazawa told reporters. He also said that Japan will increase American rice imports under the current minimum access framework, which has allowed roughly 770,000 metric tons of foreign rice to enter Japan annually tariff free. Japan and the United States will make efforts to strengthen supply chains through Japanese investment in the U.S., with a focus on semiconductors, pharmaceuticals, steel, shipbuilding, critical minerals, aerospace, energy, automobiles, artificial intelligence and quantum technology. Japanese government-affiliated financial institutions will provide up to $550 billion in equity investments, loans and loan guarantees, Akazawa said. He noted that defense spending targets were not included in the deal, and that Japan made no commitments to lower tariffs on U.S. products, as they are already very low. Finance Minister Katsunobu Kato said on Wednesday that the deal does not include any agreements on the yen-dollar exchange rate. 'I'm kind of surprised," said William Chou, deputy director of Hudson Institute's Japan Chair, in discussing the auto tariffs. The fact that Japan was able to cut the rate by 12.5 percentage points is a huge accomplishment, he said. Chou added that Japan has promised access and reforms that in the eyes of the U.S. administration "create a long-term pathway towards trade balance.' But Ryo Sahashi, a professor at the University of Tokyo's Institute for Advanced Studies on Asia, called the deal "an extremely limited win." 'What we've achieved is merely a reasonably decent result compared to the worst-case scenario,' he said. 'Japan has simply escaped the worst possible situation, nothing more.' The U.S. president announced the deal after a 70-minute meeting at the White House with Akazawa, who arrived in Washington on Monday for an eighth round of negotiations with the Trump administration. Prior to the meeting at the White House, Akazawa met with U.S. Commerce Secretary Howard Lutnick for more than two hours Monday evening and Treasury Secretary Scott Bessent for about 30 minutes Tuesday afternoon. 'It was a tense and high-stakes negotiation,' Akazawa said of his meeting with Trump. 'Both sides were fully serious and operating at the limit.' On X, Akazawa posted a photo in the White House with a hashtag that translates to #MissionComplete. People react as they read a newspaper special edition reporting on the U.S.-Japan tariff deal, in Tokyo on Wednesday. | REUTERS Ishiba — who has come under immense pressure to resign after the ruling coalition suffered a defeat in an Upper House election and lost its majority in the chamber — took credit Wednesday morning in Tokyo, saying the deal is a result of efforts made by his administration since February. 'This is precisely about prioritizing investment over tariffs,' Ishiba said. 'Since I proposed this idea to President Trump during the summit at the White House in February, I have consistently advocated for it and strongly pushed the U.S. side, and this agreement is the result of those efforts. 'I believe this will contribute to Japan and the United States working together to create jobs and promote high-quality manufacturing, thereby fulfilling various roles on the global stage moving forward,' he told reporters. News reports on Wednesday in Tokyo indicated Ishiba might resign by the end of August, though the prime minister denied this later in the day. 'Ironically, the Ishiba administration appears destined to be driven from office, with this tariff negotiation success potentially becoming its greatest — and final — achievement,' said Sahashi. But even if the leadership changes, Japan is likely to stick to the deal as part of Ishiba's legacy, said Hudson Institute's Chou. "I don't think a different leader would have necessarily been able to find a different path,' Chou said. The surprise breakthrough comes just ahead of an Aug. 1 deadline set by Trump in which the reciprocal rate for Japan was set to rise to 25%, up from the baseline 10%. Japan had previously eyed a meeting between Ishiba and Trump at the Group of Seven summit in June to reach a framework agreement, but auto tariffs had been a major sticking point. In the recent weeks leading up to Tuesday's agreement, Trump had expressed frustration with Japan and the pace of negotiations with the country, at one point threatening to take the reciprocal rate as high as 35%. 'I think both sides can claim that they got parts of what they wanted,' Chou said, while adding that the question now is whether Japan can carry out the pledges it has made. 'We'll have to see how that is carried out. I'm sure the Trump administration will also be paying very close attention."
Japan Times
13 hours ago
- Japan Times
Why markets may soon call America's tariff bluff
Three months after President Donald Trump announced plans to impose sweeping new tariffs on most countries, the U.S. economy appears surprisingly resilient. The stock market has rebounded from its initial slump, inflation remains under control and fears of a recession have receded — or at least they had before Trump announced a new 30% tariff on imports from Mexico and the European Union, two of America's biggest trading partners. In the months since Trump's initial announcement, several countries have entered negotiations with the United States, offering concessions they had long resisted. Many observers view this as evidence that Trump's aggressive trade tactics are working and that economists may have overestimated the potential costs. Yet this interpretation overlooks a critical detail: Many of the tariffs that Trump announced over the past few months have not been fully implemented. In fact, the administration has repeatedly backed down from its initial threats — a pattern so consistent that it has earned the acronym TACO: 'Trump always chickens out.' Despite its outspoken distrust of experts — particularly economists, scientists and health professionals — the Trump administration has consistently been attuned to financial markets. Since early April, announcements of new or increased duties have repeatedly triggered stock-market declines. In response, the administration has often softened its stance by issuing exemptions, delaying some tariffs and renegotiating others, leading to quick rebounds in equity prices. Announcements of bilateral deals have been met with investor optimism, while renewed threats of escalation have triggered sell-offs. Until recently, this feedback loop has helped rein in the administration's trade policies. But the latest escalation — including a 50% tariff on copper, higher-than-expected tariffs on goods from Vietnam and stalled negotiations with the EU — has barely moved the markets, with equity prices remaining elevated. The most plausible explanation is that investors no longer believe the administration will follow through on its threats. Instead, they see them as part of a now-familiar cycle: bold proclamations followed by delays or partial implementation. Complacency, however, introduces a new kind of risk. If markets become desensitized to Trump's tariff threats, they may no longer serve as an effective check on potentially harmful policies. Freed from that constraint, Trump could be emboldened to move forward with measures his administration has so far been reluctant to implement. It's a classic 'boy who cried wolf' dynamic. In the early stages, Trump's aggressive rhetoric helped bring negotiating partners to the table without triggering the worst-case economic scenarios, largely because the market backlash acted as a deterrent. But as investors increasingly dismiss his tariff threats, the likelihood that he will follow through on them grows. And if that happens, the long-feared consequences could finally materialize: higher consumer prices, reduced trade, disrupted supply chains and slower long-term growth. This dynamic extends beyond financial markets. Many countries that were once firmly committed to multilateralism are now pursuing bilateral deals with the U.S. in the hope of avoiding punitive tariffs. Some see these developments as vindication of the administration's current approach — evidence that the U.S. can use its economic power to reshape a system seen as unfavorable to American interests. But the shift toward bilateralism is less an endorsement of Trump's approach than a pragmatic response. Confronting the U.S. directly would be costly. Finding themselves on increasingly hostile and unpredictable terrain, many governments are buying time and hedging their bets. Such hedging can move in only one direction: away from the U.S. and toward alternative trading partners, particularly China. For most countries, that is not the preferred outcome. Vietnam, for example, has openly expressed its desire to strengthen ties with the U.S. rather than deepen its reliance on China. But as U.S. trade policy grows more erratic, governments are increasingly being forced to choose between the two powers. The irony is that Trump's efforts to bully foreign governments will ultimately diminish America's global influence. Economic leverage, after all, depends on engagement. The U.S. can pressure trading partners today precisely because it remains deeply integrated into the global economy. Consequently, U.S. policymakers now find themselves in a double bind. In the short term, financial markets have mitigated the impact of Trump's aggressive rhetoric by discouraging implementation of the policies that follow from it. But if investors keep treating his threats as empty noise, they will ignore the wolf when it appears. Moreover, given America's central role in the global trading system, its retreat from multilateralism will drive other countries to seek alternatives and diversify their trade relationships. As they become less dependent on the U.S. market, America's bargaining power will inevitably decline. While the Trump administration's strategy may appear to be working, the absence of immediate costs is not evidence of its long-term viability. Instead, it is a sign that the warnings were heard and — for a time — heeded. If the administration ignores those warnings, economists' dire predictions may come true. Pinelopi Koujianou Goldberg, a former World Bank Group chief economist and editor-in-chief of the American Economic Review, is professor of economics at Yale University. © Project Syndicate, 2025
