Following is the unofficial transcript of a CNBC interview with U.S. Treasury Secretary Scott Bessent on CNBC’s “Squawk Box” (M-F, 6AM-9AM ET) today, Monday, July 7. Following are links to video on CNBC.com:
Several trade announcements coming in the next 48 hours, says Treasury Secretary Bessent
JOE KERNEN: And join us now for the latest on tariffs and the recently passed budget bill and more, Treasury Secretary Scott Bessent. Mr. Secretary, thanks for joining us. I don't know how much you could necessarily hear of our last conversation. We definitely want to talk trade, tariffs, and all the above, but let's keep the discussion going about the big beautiful bill, deficit concerns, debt concerns. You have made the argument in the past that this will address the deficit, and you see deficits in future years coming down from whatever it is, 6% of GDP. How do you argue that that's going to happen? Tell us again.
TREASURY SECRETARY SCOTT BESSENT: Well, good morning, Joe. And look, we inherited a mess, and I'm not sure where all these deficit hawks were when Team Biden was blowing out the deficit. So, last year was 6.7% of GDP, which was the highest it had been when we weren't in a recession, weren't at war. And as your previous guest said, we don't have a tax collection problem. We have a spending problem, and we are trying to get that under control. We are also trying to accelerate growth because changing the growth trajectory upward solves a lot of the deficit problems.
KERNEN: Mr. Secretary, I ask the question that, you know, not all deficit spending is equal, I don't think. Do you, would you argue that if a deficit resulted from lower tax rates or from extending the tax cuts, whatever you want to call it, if it can cause some growth, is that superior to the deficit, or is it less deleterious than the deficit you get just from green new deals or IRAs or whatever you're talking about, the government, just transfer payments and the like?
BESSENT: Well, Joe, you're exactly right. Does the spending create more growth, and is the GDP growing faster than the deficit? One of the things that I agreed with Secretary Yellen on, the important number is the debt to GDP, and we intend to bring that down. We also intend to -- we've cut spending. On the IRA, there's substantial pullbacks. A lot of those were uneconomical, stranded assets. And the Trump economic agenda, as I've said many times, it's a three-legged stool. It's trade, it's tax, and it's deregulation. So, you know, I also believe that the substantial amount of deregulation that we're doing is going to accelerate economic growth. And the important thing, too, is we're going to have economic growth in a non-inflationary manner, unlike we saw in the previous four years.
KERNEN: OK, let's move on to trade. And it's amazing how quickly things move. I know yesterday you said by Wednesday, we might have a couple of more deals to announce. I know it's Monday. It's not even nine o'clock yet. Can you give us any idea whether that's likely? Is India, is that in the mix? Can you break any news for us here that something's going to happen in the next 48 hours?
BESSENT: Yeah, we are going to have several announcements in the next 48 hours. And Joe, I think what President Trump is concerned about is the quality of the deals, not the quantity. As you could imagine, as he started herding the cats and trying to get everyone across the finish line, when he said that there's a chance that countries could boomerang back to their April 2nd reciprocal tariff levels, we've had a lot of people change their tune in terms of negotiations. So, my -- my mailbox was full last night with a lot of new offers, a lot of new proposals. So, it's going to be a busy couple of days. But, you know, importantly too, that President Trump has said that -- they would -- the countries would not go back to the reciprocal rate until August 1st.
ANDREW ROSS SORKIN: Mr. Secretary, a question on behalf of a number of viewers who are in business importing things from Vietnam, and they want to know the following. They say, this 20%, is that on top of existing duties? Is it 20% overall? What is the actual number? Because I think there's a lot of folks who are still confused or trying to do some planning here.
BESSENT: Andrew, 20% overall.
SORKIN: 20% overall. So, that's not tacked on to something else before that.
BESSENT: No, this supersedes all the other tariffs. Now, there may still be some of the 232 tariffs for specific industries, but in terms of generalized, it's 20%.
KERNEN: Mr. Secretary, I think you took, or at least it was interpreted it was a softer tone on what's going to be included in the letters that go out on Wednesday. What can we expect? What are they? Are they, is it ultimatums and the President's way or the highway with some of these numbers? Or are there details on, I don't know, sort of staking out positions and letting these countries know what, where they -- where they have more work to do?
BESSENT: No, they're pretty standard letters, Joe. It's just, thank you for wanting to trade with the United States of America. We welcome you as a trading partner and here's the rate unless you want to come back and try to negotiate.
KERNEN: The one thing I've noticed that a lot of people that don't want any tariffs and are the most critical of the entire approach to trade, are the ones that seem most disappointed when the President doesn't follow through on the tariffs that he's promised. So, when it appears that he's trying to do deals and trying to, I don't know, negotiate from a position of strength, they're the first ones to criticize him for not following through with the really draconian tariffs that we all hope doesn't come -- come to pass.
BESSENT: Well, Joe, as I've said over the past few weeks, TDS, which used to mean Trump Derangement Syndrome, has turned into Tariff Derangement Syndrome. And we -- this same group was pulling for the economy to slow, for inflation to pop up. None of that has happened. None of that has happened. And as a matter of fact, we're taking in substantial tariff income, which I don't like the CBO scoring, but some Democrat made the mistake of asking the CBO to score tariff. And over the 10-year window, that's $2.8 trillion based on the current deals. And I can tell you that the deals that are coming out will be slightly higher than that. So, again, I don't like CBO scoring, but $2.83 trillion over the 10-year window substantially eases the deficit.
BECKY QUICK: Mr. Secretary, you are an incredibly busy man. I think your portfolio is more expansive than any Treasury Secretary I recall ever seeing. I just wonder, what job do you think is more important to the markets, to the economy? Would it be Treasury Secretary or Chairman of the Federal Reserve?
BESSENT: Look, they're both very important jobs. I am busy as Treasury Secretary. Becky, I think you're -- I think you're asking which is more important for me to do.
QUICK: I am.
BESSENT: OK. Look, I will do what the President wants, but I think that we are making great gains here at Treasury. We've had a busy five, six months out of the box, and, you know, we've got a lot to do. Passing the One Big, Beautiful Bill on July 4th was an incredible achievement by the President, by Speaker Johnson, by Leader Thune, but now Treasury is tasked with the implementation.
SORKIN: Mr. Secretary, as you think about interest rates, we've heard from the President talking about what he would describe as too late Powell. Powell is not going to be in this job any year from now, no matter what. And one of the conversations we had with Steve Liesman last week was the idea that maybe the market has already built in almost the shadow Fed idea that you raised about a year ago before the election in terms of how the market thinks. Do you think that interest rates, to the extent they have been kept down irrespective of what the Fed is doing, or at least the expectations of what the market thinks, is a function of that?
BESSENT: Well, Andrew, I always say markets live in the future, and I think markets may be pricing in that perhaps the President's right that rates should be lower. You know, I would say that the market's pricing in lower, I think it's two cuts for the rest of the year, and then the two-year, the overnight and the two-year are inverted. So, maybe the market's just pricing in the economic fundamentals. And sure, a different Fed share is a kind of forward guidance, but as I reiterate to people all the time, it's not just the Fed share, it's a committee.
SORKIN: By the way, what are your lunches like with Jay Powell these days?
BESSENT: Well, it's breakfast, and, you know, we have -- we have a lively exchange. We do a home game and away game. He comes to the Treasury, I go to the Fed. The Fed's food is much better, so I enjoy breakfast over there. And we have very lively and far-reaching discussions with a lot of mutual respect.
KERNEN: They can spend as much money as they want on breakfast at the Fed, they're printing. I mean, it's like anything goes. It's like -- you know.
BESSENT: They're not worried about egg prices over there.
QUICK: Are people actually leaving tariff offers for you on your voicemail? Were you, was that—
BESSENT: I -- they're coming in a lot of different ways, Becky.
QUICK: That's curious.
KERNEN: Yeah. At this point, you're still Treasury Secretary, so I need to ask you about the dollar. And it actually is a -- sort of an issue that, you know, the markets are at new highs, equity markets. The bond market has been behaved after the big, beautiful bill. But people looking to nitpick or looking for -- for something to really be concerned about, talk about the dollar's behavior since the beginning of the year. I think it's the worst start of a year in 30, 40, 50 years. Was it overvalued, Mr. Secretary? Was this long due? And given the recalibration in global trade the president's trying to effect, is this to be expected and actually welcomed?
BESSENT: Well, Joe, I was in the investment business 30, 40 years, and more than half my gains came from currency. So, I think I have a good box to stand on here when I talk about currencies. And I can tell you that it's natural for currencies to go up and down. And what we've seen is not out of the ordinary, maybe the speed with which it happened. But, you know, again, these days things seem to happen much faster. After the bottom in the stock markets on April 9th, we had the fast -- fastest recovery from a 15% drawdown in history. And I would point to President Trump's first term. Over the first year, the dollar went down about 7%. When the Tax Cuts and Job Acts were passed in December, then over the ensuing few years, the dollar went up. And the value of the dollar, it could mean that other countries' currencies are strengthening. The index that you're referring to is the DXY. The largest component of that is the euro. And one would expect that the euro would appreciate given the fiscal spend that we are seeing coming out of Europe, especially on defense, and especially from Germany. The other thing that's happened, we have seen a substantial depreciation in the Chinese currency, the RMB versus the euro. So, I believe that's down about 11, 11.5% on the year, and it's just hit an all-time low. So, you know, I don't see people waving their hands in the air about the Chinese currency depreciating.
SORKIN: Mr. Secretary, I wanted to ask you about China. About a week ago, President Trump referred to a potential deal over TikTok in the next two weeks. Some people looked at that and said, that's an interesting chess piece as part of the larger negotiation with China. What is the timeline at this point with China? Can you give us any sort of sense of how things are going there?
BESSENT: Andrew, one of the things that's not my portfolio is TikTok, so I can't speak to that directly. What I can speak to is I'm going to be meeting with my Chinese counterpart sometime in the next couple of weeks. We had good meetings in Geneva and London. We both approached it with great respect to the two largest economies. And I think there are things for us to do together if the Chinese want to do it. So, we will discuss whether we are able to move beyond trade into other areas.
KERNEN: Secretary, I know you have to leave. I was kind of clumsy in asking my question about just trying to talk about different types of deficits. Judy Shelton, I don't know what happens with the Fed. I don't know who's there in a year, but this is pretty eloquent. She sent this in. This has been one of her "Wall Street Journal" pieces. There is a difference between government overspending, which borrows from the future to pay for current consumption and tax-cutting incentives now to spur more production down the road. Government borrowing to finance socialist redistribution isn't the same as government borrowing to invest in entrepreneurial capitalism. That's pretty well said. I might tweet that out. You're free to tweet that out if you want too.
BESSENT: OK. And, you know, Joe, the other thing too is that I think in the Tax Cuts and Jobs Act, which was made permanent, is the 100% expensing of --
KERNEN: That's not talked about much, right?
BESSENT: -- which is very powerful. We also have a five-year window for 100% expensing for factory structures and agriculture structures. So, to take a tax hit on that is really, you're really winding the spring and you are creating high after-tax returns on capital, which increase productivity, which is what makes countries rich.
KERNEN: Very good. Let us know. We're here if you want to get it out. You know, I think we count as disclosure, don't we? We count as fair disclosure. If -- like if you're leaving now and you get something in your -- in your email box or something, just call us back. Will you do that, Mr. Secretary? Let us know.
BESSENT: After the president, Joe, you'll be my second call.
KERNEN: Right, there you go. That's not bad. Thank you, Secretary Bessent, appreciate it.
BESSENT: OK. Thank you all.
KERNEN: OK.
