Bessent Proposes 15% Tariff on Japanese Autos Sparks Debate on Fed's Independence Amid Policy Shifts

US Treasury Secretary Scott Bessent has delivered a series of high-stakes remarks addressing the Federal Reserve and international trade strategies, sparking debate over the central bank’s independence and the administration’s economic priorities. In a recent interview, Bessent outlined a 15% tariff on Japanese automobiles and a collaborative financing mechanism to support US strategic industries, while criticizing the Fed for alleged political bias and overreach in non-monetary policy areas [1]. His statements underscore a broader push to reassert executive influence over financial governance, though they also highlight tensions between the Treasury Department and the Fed’s traditional autonomy.

Bessent framed the new trade agreement with Japan as a cornerstone of his strategy to bolster domestic industries, emphasizing that the 15% tariff on automobiles and related measures aim to stimulate US production. He also acknowledged the complexity of negotiations with the European Union, citing the “problem of joint action” among its 27 member states as a significant barrier to progress [1]. Meanwhile, his upcoming meeting with Chinese counterparts in Stockholm signals a shift toward “bigger discussions,” including a potential rebalancing of trade dynamics where the US focuses on production and China on consumption. Bessent hinted at the possibility of a new purchasing agreement akin to the Trump-era Phase One deal, though details remain unconfirmed.

The Treasury Secretary’s most controversial comments targeted the Federal Reserve. He accused the central bank of allowing “political bias” to influence its economic projections, calling for an internal review of its non-core operations, including bank supervision and tariff-related analyses [2]. Bessent argued that the Fed’s growing involvement in areas beyond monetary policy risks eroding its independence and credibility. While he stopped short of demanding Chair Jerome Powell’s resignation, he criticized Powell’s leadership for failing to address these issues proactively, suggesting that the Fed’s current trajectory could undermine public trust in its neutrality [3].

Market reactions to Bessent’s remarks were mixed. Treasury yields rose as traders recalibrated expectations for the Fed’s upcoming policy decisions, reflecting concerns that the Treasury’s criticisms could pressure the central bank to adjust its stance. Analysts noted that while transparency in the Fed’s decision-making is widely supported, the proposed investigations risk politicizing an institution designed to operate independently [6]. Bessent’s focus on institutional conduct, rather than immediate inflation or rate-cutting, further complicated market interpretations of his priorities.

The broader implications of Bessent’s statements extend to the Biden administration’s push to assert authority over economic policy. His public clashes with the Fed highlight the delicate balance between regulatory oversight and institutional independence, particularly as the central bank’s mandates expand. Critics warn that overreach could dilute the Fed’s focus on its core goals of price stability and maximum employment [7]. Conversely, proponents argue that enhanced scrutiny is necessary to ensure accountability in an era of evolving economic challenges.

Bessent’s call for a “big, beautiful rebalancing” of US-China trade dynamics also drew attention, though the feasibility of such a shift remains uncertain. The emphasis on strategic financing mechanisms for domestic industries aligns with broader efforts to reduce reliance on foreign supply chains, but success will depend on Japan’s commitment to the proposed collaboration and China’s receptiveness to negotiations.

Sources:

[1] [Bessent says Fed forecasts 'politically biased'](https://www.reuters.com/business/bessent-says-fed-forecasts-politically-biased-2025-07-23/)

[2] [Fed under fire over tariffs, Bessent orders probe into central...](https://m.economictimes.com/news/international/world-news/stop-fear-mongering-fed-under-fire-over-tariffs-bessent-orders-probe-into-central-banks-ops/videoshow/122838421.cms)

[3] [Bessent sees no reason for Powell to step down from US...](https://sg.finance.yahoo.com/news/bessent-sees-no-reason-powell-060216898.html)

[6] [Treasury yields tick higher after Bessent reassures market...](https://www.cnbc.com/2025/07/23/10-year-treasury-yield-bessent-powell-rates.html)

[7] [US Treasury secretary calls for examination of 'entire'...](https://www.ft.com/content/b0131958-a0ea-49bf-b5d4-31053c7d2d24)