Bessent says US tariff revenues to rise ‘substantially,' focus on reducing debt

Straits Times

2 days ago

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Treasury Secretary Scott Bessent expects to substantially revise upward his earlier estimate of US$300 billion (S$3.8 billion) in revenues from the tariffs.
WASHINGTON - US Treasury Secretary Scott Bessent said he expects a big jump in revenues from sweeping tariffs imposed by President Donald Trump, and said the money would be used first to start paying down the federal debt, not to give rebate cheques to Americans.
Mr Bessent, speaking in an interview on CNBC's Squawk Box, said he expected to substantially revise upward his earlier estimate of US$300 billion (S$3.8 billion) in revenues from the tariffs, but declined to be more specific.
Mr Bessent said he had not spoken with Mr Trump about the idea of using funds from the tariffs to create a dividend for Americans, but stressed that both of them were 'laser-focused' on paying down the debt.
'I've been saying that tariff revenue could be US$300 billion this year. I'm going to have to revise that up substantially,' Mr Bessent said. 'We're going to bring down the deficit to GDP. We'll start paying down the debt, and then at that point that can be used as an offset to the American people.'
The US economy could return to the 'good, low-inflationary growth' of the 1990s, Mr Bessent said, but he blamed higher interest rates for problems plaguing some pockets of the economy, singling out housing and lower-income households with high credit card debt.
A cut in the Federal Reserve's key interest rate - which Mr Trump has continually pressed for - could help facilitate a boom or pickup in home building, which would help keep prices down in one to two years, he said.
The US Census Bureau on Aug 19 reported a small increase in groundbreaking for single-family homes and permits for future construction in July, even as high mortgage rates and economic uncertainty continued to hamper home purchases.
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Mr Trump's wide-ranging import tariffs have kept the Federal Reserve from lowering interest rates this year, with most central bank policymakers wary of easing borrowing costs until they have more confidence the levies will not rekindle inflation, which has yet to return to the Fed's 2 per cent target.
Recent indications of softening in the job market, however, have largely convinced investors that the Fed will cut rates by a quarter of a percentage point when it meets in mid-September. That expectation has helped bring down mortgage rates in recent weeks.
Mr Bessent has previously said a 50-basis-point cut in rates was warranted. REUTERS