Wall Street Gets Rude Shock as Bessent Plays Second Fiddle on Tariffs

Ladies and gentlemen, buckle up! The market just got a rude awakening, and it’s all thanks to President Trump’s sweeping tariffs. The stock market is in free fall, and Wall Street is scrambling to make sense of it all. But here’s the kicker: Treasury Secretary Scott Bessent, who many thought would be the voice of reason, is playing second fiddle in this tariff drama.

The tariffs were announced on April 2, 2025, and the market has been in a tailspin ever since. The S&P 500 is down to its lowest level in 11 months, and $5.4 trillion in value has been wiped out. The market carnage is real, folks, and it’s all because of these tariffs. China’s retaliatory tariffs of 34% on all U.S. goods have only added fuel to the fire, sending investors into a panic.

Now, you might be thinking, “Where’s Scott Bessent in all of this?” Well, he’s not the primary driver of the tariff announcement, that’s for sure. Bessent, the former chief investment officer of Soros Fund Management, was seen as a potential ally who could explain the economic implications of these tariffs to the president. But no, he’s been sidelined. The tariffs were largely shaped by a small group within Trump’s inner circle, with critical decisions about the duties’ structure going down to the wire before the president’s announcement.

Bessent has been using his role in Oval Office meetings to lay out potential scenarios for markets and the economy based on different tariff levels. But he’s not involved in negotiations with other countries and has been focused on the administration’s tax agenda. In other words, he’s been left out in the cold.

The market plunge has caused some of Trump’s most ardent backers in the political world to predict broader fallout. Texas Senator Ted Cruz warned that the tariffs could “destroy jobs here at home and do real damage to the US economy,” and predicted a “bloodbath” in the 2026 midterm elections. Despite the market backlash, Trump has shown that he won’t be easily persuaded to change course by the tariff-induced plunge, stating that the policy will remain and that large corporations are unconcerned by the tariff plan.

The market fallout has caused nervousness within the administration, with officials eyeing whether the market fallout extends into a third session on Monday. However, there’s a sense that any shift in policy would have to come from the president alone, as Trump is focused on the long term with tariffs, stressing the need to revive the US manufacturing base, secure supply chains, and reduce reliance on rivals. The White House spokesman Kush Desai stated that “The only special interest guiding President Trump’s decisions is the interest of the American people,” and that the entire administration is aligned on addressing the national emergency posed by the country running regular trade deficits.

The implementation of tariffs has also led to a disconnect between public anxiety about the jobs market and the reality of labor market indicators. While there hasn’t been a clear sign of a surge of unemployment claims or a notable scaling back of private-sector hiring, there are signs that things are starting to seep into the numbers, with a drop in labor market demand and a spike in federal layoffs. The tariffs announced this week will not be reflected in the March labor data, although those that rolled out earlier in President Trump’s term may be. The prospect of tariffs has probably already affected business behavior, with predictions complicated by a disconnect between public anxiety about the jobs market and the reality of labor market indicators.

The potential long-term economic implications of the tariffs are multifaceted and complex. The administration's tariffs aim to protect and revive the US manufacturing sector. By imposing high tariffs on imported goods, the administration seeks to make domestic production more competitive. For instance, the tariffs on steel and aluminum are designed to boost domestic production in these sectors. However, the effectiveness of this strategy is debatable. Historically, high tariffs have been used to protect emerging industries, but the current global economic landscape is vastly different from the past. The US economy is now more service-oriented, and many manufacturing jobs have been lost to automation rather than foreign competition.

The administration's tariffs also aim to reduce the US's reliance on foreign trade partners. This is evident in the administration's focus on securing supply chains and reducing trade deficits. For example, the administration has targeted China with 34% of additional reciprocal tariffs, bringing total US tariffs against the world's second-largest economy to 54%. However, this strategy could backfire. The tariffs have already sparked a global trade war, with countries like China retaliating with their own tariffs. This could lead to a cycle of escalating tariffs, harming global trade and economic growth.

The tariffs could lead to higher prices for consumers and businesses. This is because tariffs increase the cost of imported goods, which can be passed on to consumers. For example, the tariffs on steel and aluminum have already led to increased domestic prices for downstream industries. This could lead to higher inflation, which could erode the purchasing power of consumers and businesses.

The tariffs could also lead to a recession. The JPMorgan chief economist has predicted that the odds of a global recession will rise to 60% if Trump’s tariff plan goes forward as initially presented. This is because the tariffs could lead to a slowdown in economic growth, as businesses and consumers face higher prices and uncertainty.

While the administration's tariffs aim to create jobs in the US manufacturing sector, they could also lead to job losses in other sectors. This is because the tariffs could lead to a slowdown in economic growth, which could lead to job losses in sectors that rely on trade, such as the automotive and retail sectors. For example, the tariffs on cars and auto parts have already led to job losses in the automotive sector.

In conclusion, the long-term economic implications of the tariffs are uncertain and depend on a variety of factors. While the administration's tariffs aim to revive the US manufacturing base and reduce reliance on foreign trade partners, they could also lead to higher prices, inflation, a recession, and job losses.