HOUSE WAYS & MEANS COMMITTEE HEARING WITH TREASURY SECRETARY BESSENT
On June 11, the House Ways and Means Committee held a hearing with Treasury Secretary Scott Bessent.
Key Takeaways
- Chairman Smith (R-MO) outlined how tax relief, fairer trade, and deregulation are working together as components of President Trump’s economic agenda. Committee Republicans emphasized how reconciliation is supportive of economic expansion by encouraging investment and increasing productivity, emphasizing how it works toward economic growth without triggering inflation.
- Secretary Bessent highlighted the importance of passing the Bill, emphasizing it as essential to provide certainty in investment and extend necessary tax relief from the 2017 Tax Cuts and Jobs Act (TCJA). He outlined it as the foundation for unlocking private sector investment, strengthening domestic manufacturing, and driving broad-based economic growth.
- Chairman Smith highlighted that April’s trade deficit was halved, with both U.S. exports increasing and imports decreasing. He noted that more than seventy countries have requested rapid negotiations to improve on fair-trade relationships, with President Trump’s tariffs working to level the playing field and demanding fair treatment.
- Secretary Bessent discussed how the administration’s trade focus is on the most egregious offenders, but that several of the eighteen key partners have presented strong offers and are negotiating in good faith. He stated that final decisions would be made by President Trump but affirmed that extensions are possible for countries negotiating in good faith. He also noted discussions with U.S. Trade Representative (USTR) Greer regarding a possible one-size-fits-all regional trade deal for smaller economies.
- Representative Fischbach (R-MN) criticized the Biden administration’s failure to finalize guidance on 45Z, citing issues and uncertainty created for the biofuels industry. She called for Secretary Bessent’s commitment to expedite finalizing 45Z guidance and to work with the Committee to make the credit as strong as possible for farmers. Secretary Bessent agreed, citing the need to work quickly to ensure 45Z is a North American product and that no overseas actors, specifically Chinese companies, can use Mexico as a backdoor.
- Representative Murphy (R-NC) inquired about discussions with China regarding transshipment practices that undermine Section 301 tariffs. Secretary Bessent responded that while China has pushed back on the de minimis exemption, the administration ended it and will impose tariffs on all de minimis imports. He stated that a global de minimis threshold will be established, noting that China is the primary contributor due to its export-driven deflationary model.
- Representative Estes (R-KS) asked why it is critical to restore immediate research and development (R&D) expensing on a permanent basis, with Secretary Bessent responding that the U.S. is the undisputed global leader in technology in part due to the ability to expense R&D. He emphasized that restoring the R&D provision is essential.
- Secretary Bessent stated that the most powerful support for companies facing input cost pressures is certainty in the Bill’s permanence, alongside 100 percent expensing for equipment and factory structures. He outlined how it would enhance after-tax returns on capital, accelerate capital allocation decisions, and support U.S. competitiveness without the need to subsidize specific industries. He noted conversations with industry stakeholders delaying capital expenditures until the Bill’s passage, highlighting that farmers operating on thin margins need certainty on retroactive 100 percent expensing to make equipment purchases.
- Representative Hern (R-MO) raised Section 899’s bias against investment in infrastructure, alongside how long depreciation schedules erode the value of deductions, which hinders domestic manufacturing growth. Secretary Bessent emphasized that the Bill is a fiscal one, not a revenge bill. He stated that Section 899 is not used as a negotiating tool, criticizing the allowance of foreign countries taking U.S. companies’ tax revenue for their own treasuries.
- Representative Miller (R-OH) asked about the potential benefits of stablecoin legislation for U.S. Treasury demand and credit access, with Secretary Bessent responding that he has urged swift advancement of the Guiding and Establishing National Innovation in U.S. Stablecoins (GENIUS) Act. He stated that U.S. dollar-backed stablecoins collateralized with Treasury bills could become a substantial new source of demand for U.S. Treasuries, noting it could also help secure long-term dollar dominance.
- Committee Democrats, led by Ranking Member Neal (D-MA), called for more sustainable, comprehensive free trade agreements over chaotic applications of tariffs. Representative Panetta (D-CA) cited how previous trade deals under the first Trump Administration, referencing the China Phase One agreement, led to unenforceable agreements. Questioning included whether China is a reliable and trusted trading partner, as well as whether there will be a “Liberation Day 2.0.”
- Democrats discussed criticisms and opposition to the Bill based on Congressional Budget Office (CBO) estimates of $4 trillion in added debt and long-term deficit implications. They framed the Bill as an irresponsible explosion of the deficit alongside statutory cuts to critical programs.
Summary
Opening Statements and Testimony
Chairman Jason Smith (R-MO)
Different parts of President Trump’s economic agenda on tax relief, fairer trade, and deregulation are working together to ignite a new era of American prosperity. $9 trillion has been pledged by the private sector to be invested in new facilities, factories, and workers. In April, we saw the monthly trade deficit cut in half, with both U.S. exports increasing and imports decreasing. More than seventy countries have requested rapid negotiations to improve our trade relationships to be fairer to U.S. workers and businesses. We are creating new jobs in the private sector, rather than more federal taxpayer-funded bureaucrats. Congress must pass the One, Big, Beautiful Bill to prevent a looming $1,700 tax increase and instead give a $1,300 tax cut. Nearly thirty million small businesses will benefit from a pass-through deduction that is both expanded and made permanent. Two million family farms and small businesses will benefit from a death tax exemption that is permanent, larger, and indexed to inflation. The renewal of pro-growth tax policies will attract more investment, new plants and facilities, save 1.1 million manufacturing jobs and help boost America’s GDP by over 3.5 percent. We are replacing Democrats’ bad tax policy with good tax policy and broad benefits. We are cutting spending by $1.6 trillion, the largest mandatory spending cut in U.S history. This Bill breaks with Democrats on surrendering U.S. tax revenue to foreign governments and instead puts America First. We will give President Trump the tools needed to stand up to foreign nations that unfairly tax U.S. businesses, and will defend our tax sovereignty. If these countries choose to withdraw their unfair taxes, this policy will achieve its goal. I look forward to quickly passing Bill to get it to the President’s desk by July 4th. This Committee will work closely with Treasury to ensure implementation gives the tax relief owed as soon as possible. The Biden administration acknowledged the success of the first-term Trump tariffs by keeping them in place, with President Trump back in office and once again aggressively leveraging tariffs to create fairer treatment. We have made progress to tear down unfair trade barriers, with ongoing consultation to ensure better trade deals that open market access for U.S. products and services as well as hold foreign trading partners accountable.
Ranking Member Richard Neal (D-MA)
Republicans are rubberstamping the administration’s onslaught of unprecedented and irresponsible abuses of power. They are attempting to ram through an abomination of a bill that adds at least $3 trillion to the debt. The Trump administration and congressional Republicans are racing to do it on rushed timelines and in the dead of night before their own members, let alone the public, can catch on. They are gutting the IRS, shredding enforcement, and handing the ultra-rich billions while everyone else gets scraps. The Administration is robbing states of manufacturing and energy projects that have already proved effective in creating jobs and spurring investments. Canceling these projects will cost thousands of jobs and hand innovations to our global competitors. How does taking jobs away and ceding innovation to China square with what this administration claims to stand for? When named Treasury Secretary, Bessent had a reputation for steady, sound, fact-based decision-making, which set him apart from others in the President’s orbit. It is disappointing to see him attack nonpartisan scorekeepers like CBO and Joint Committee on Taxation (JCT), and rely instead on fantasy math to defend a bill that clearly explodes the deficit. If the math Bessent projects is to be true, why do the bond markets not believe him? He claims CBO and JCT are providing partisan numbers, but it is the markets who are reacting. When the President took office, we warned the consequences would be swift and over four months in, they are undeniable. Markets have been rattled, confidence is crashing, and GDP is shrinking. The President has ignited a reckless trade war he has no plan for and is over his head with.
Treasury Secretary Bessent
Treasury is committed to working with Congress to improve the U.S.’s finances, create new jobs, and strengthen the economy. We are coordinating with Congress on the President’s budget and his tax priorities in the coming weeks, alongside our efforts to advance the President’s economic agenda on tax and trade. Treasury just completed its most successful tax filing season in years, and we did so while improving efficiencies and cutting costs at the IRS by $2 billion. This success has taken place against the backdrop of one of the most consequential tax proposals ever to come before Congress: the One, Big, Beautiful Bill Act. The Bill will make the 2017 tax cuts permanent, providing individuals and businesses with certainty and build economic momentum. It is squarely aimed at boosting the working and middle class and reinvigorating U.S. manufacturing. According to the Council of Economic Advisers, the Bill will increase wages and take-home pay, cement no tax on tips, no tax on overtime, and tax cuts for seniors. The Bill will also incentivize unprecedented investment in U.S. manufacturing. It will provide 100 percent expensing for new factories as well as existing factories that expand operations and support Made in America. It will streamline burdensome permitting processes that often stand in the way of new manufacturing projects. It is time for the U.S. to start building things again, and the Bill makes this possible. The administration is grateful for the leadership of this committee in shepherding it through the House. We are working closely with members of the Senate to get this legislation to the President’s desk. The progress we have made on tax issues over the last four months complements the significant progress we have made in rebalancing the global economy. Since I last testified before Congress in May, the President announced a historic U.S.-U.K. trade deal. This arrangement, which creates a $5 billion export opportunity, is a preview of what is to come. Dozens of countries have engaged the administration thus far with offers to improve their trade relations with the U.S. This includes China. I have just returned from successful negotiations in London with a Chinese delegation that will not only stabilize the economic relationship between our two economies but make it more balanced. China has a singular opportunity to stabilize its economy by shifting away from excess production towards greater consumption but needs to be a reliable partner in trade negotiations. If China will course correct by upholding its end of the initial trade agreement we outlined in Geneva, then the rebalancing of the world’s two largest economies is possible. I believe, after our talks in London, they will. By challenging the decades-old status quo on tax and trade, President Trump is breathing new life into the U.S. economy. Inflation in the U.S. is at its slowest pace since 2021, and the numbers we received today take us back to the slowest pace since 2020. We are decelerating cost increases for shelter, food, and energy. After four years of price increases diminishing the U.S. standard of living, inflation is showing substantial improvement due to the administration’s policies. This strength has been exemplified in the recent performance of the stock market and consumer confidence data. The President’s bold leadership on these issues has laid the groundwork for a golden age economy.
DISCUSSION
Chairman Smith (R-MO): How does the Bill deliver? Bessent: In President Trump’s first term, substantial non-inflationary growth was created and this will happen again. No tax on tips, no tax on overtime, the tax breaks for seniors on Social Security, and the ability to deduct auto loans on new cars made in America will be restored. All of this will help overcome this horrendous affordability crisis that this administration inherited.
Chairman Smith (R-MO): Why is it important for Treasury and the President to have strong protective measures, like the one provided in the Bill, to fight against foreign taxes that discriminate against American companies? How will the administration ensure targeted use in a manner to protect or replace U.S. tax revenue? Bessent: The previous administration chose to outsource U.S. sovereignty on tax matters, and the Trump administration believes that is unacceptable. Many other countries would seek to pull in revenues from U.S. multinational corporations into their treasuries. Provisions in the Bill to combat this are staking out of our fiscal sovereignty. The U.S. tax system will stand next to what is called Pillar Two, and other countries are welcome to relinquish their fiscal and tax sovereignty to other nations. The U.S. will not. This Bill will allow us to prevent our corporate revenues from being drained into foreign treasuries, and that is in the hundreds of billions of dollars.
Chairman Smith (R-MO): How do the President’s trade policies and tariffs, and the total reset of our unfair trade and investment relationship with China that President Trump has led, fit into the broader effort to reorient the U.S.’s economy? Bessent: China has the most imbalanced economy in the history of the world. They have thirty percent share of global manufacturing and continually grow their manufacturing base. They are in the midst of a downturn, and they are trying to export their way out of it rather than take domestic measures such as increasing consumption, dealing with banking problems, or dealing with the real estate crisis. They cannot be allowed to export their way back to prosperity. Our negotiations with all countries seek to bring fairness. There are eighteen important trading partners that we are in fulsome negotiations with. Many of them are coming to us with unimaginably good trade deals to bring down tariffs and non-tariff trade barriers, currency manipulation, and the subsidy of labor and industry. Non-tariff trade barriers can be even more pernicious than tariffs. How could this have happened that the U.S. willingly became party to such unfair and unbalanced trade? As President Trump has said, I do not blame the other countries. If you could get away with it, you should. It was those sitting behind the Resolute Desk or those making trade policy who have allowed this to happen over forty years, and we are determined to rebalance that.
Ranking Member Neal (D-MA): Did the U.S. government have to borrow $2.3 trillion for the 2017 tax cuts? Bessent: The belief is that Democrats voted for the biggest blowout for the deficit in history and that we are suffering from that. This past tax year, we will have between a 6.5 and 6.7 percent deficit. I find it very difficult to be lectured to by those who created the largest deficit in history when we were not at war and not in a recession.
Vice Chairman Buchanan (R-MI): Where we are headed fiscally, especially as annual deficits exceed $1 trillion and spending continues to outpace revenue? Bessent: We have a spending problem, not have a revenue problem. We are right in line with the long-term revenues of approximately seventeen to eighteen percent of GDP. What we have seen here is a blowout in the spending, and last fiscal year was something we have never seen before. We have never seen a deficit to GDP this large when we were not at war or not in a recession or not in a pandemic or at war.
Vice Chairman Buchanan (R-MI): Can you comment on your thoughts regarding 199A and 100 percent expensing as major opportunities to support small businesses and job creators? Bessent: It is the 100 percent expensing that is powerful. We are adding not only expensing for equipment, as in President Trump’s first term, we are adding 100 percent for factory structures. If you want to build your factory here in the U.S., we want it to be tax-efficient. We want you to have regulatory certainty and quick permitting. That is likely the single most powerful aspect. The $400,000 level is unfortunately a disaster for small businesses in the 199. Most small businesses are pass-through entities, and those small businesses are substantially above that $400,000 threshold. A group of business leaders earlier this week were telling me that they are in fact holding back on capital expenditure because they need for the tax bill to pass so that they will have certainty that the 100 percent expensing will come back. We will see a sharp upward break expenditure as soon as we pass the One Big Beautiful Bill.
Representative Thompson (D-CA): Is there an independent expert that says that this Bill will not add to our national debt? Bessent: Art Laugher.
Representative Kelly (R-PA): What will happen if this Bill does not get passed and how is it going to affect taxpayers? Bessent: It is what we call in economics a sudden stop. It would be cataclysmic as the largest tax hike in history. It would be a disaster for businesses, for working Americans, and for our status in the world. To have this happen, we would see increases in taxes on thousands of dollars of working Americans. We would see businesses contract, and we would see a substantial increase in the unemployment rate.
Representative Kelly (R-PA): With current factors and the ongoing debate over whether these tariffs work or not, what more could we be doing in addition to what is already being done? Bessent: It is certainty and permanence. The corporate tax rate is permanent and businesses have great certainty, but households and small businesses do not. This administration is laser-focused here so that Main Street can do well. Having permanence, like being able to invest, hire more workers, and expand, will lead to a Main Street resurgence. We will also see a manufacturing resurgence, with approximately nine percent of Americans are now engaged in the manufacturing sector. History has shown that wage growth occurs more readily in the manufacturing sector for working-class Americans than in the service sector. The combination of small business and manufacturing, along with the President’s tax agenda for no tax on tips, no tax on overtime, a tax cut for seniors, and the ability to buy a new American-made car and deduct the interest, will solve this horrendous affordability crisis. We are dealing with separate things of affordability and inflation. Affordability is the stock of inflation and we are working to pull that down in two ways: price levels or increased real wages. I think we can do both. We just saw yet another fantastic inflation number, much of that due to a decrease in energy prices.
Representative Larson (D-CT): Would you agree that Representative Massie presented a fact-based critique and warning that this Bill is a debt bomb, citing Moody’s downgrade and rising interest rates? Was Moody’s assessment wrong, and was Representative Massie’s assessment wrong? Bessent: Representative Massie does not understand the bond market and that any 24-hour window is incorrect. The U.S. 10-year, which I repeatedly referenced, is the only major 10-year bond that has a lower yield this year. It has a lower yield today than it did on January 1st or January 20th. German yields are higher, and Japanese yields are substantially higher, but U.S. 10-year yields are lower so I am not sure what is on Representative Massie’s mind.
Representative Schweikert (R-CA): How can we work through policy, messaging, and products to move out on the curve, apply a gold-index for long-term debt, create additional interest liquidity on bonds, and protect our full faith and credit amid demographic pressures to move out on the curve, create additional interest liquidity on bonds, and protect our full faith and credit amid demographic pressures? Bessent: What you are talking about is something called the dependency ratio. The U.S. is the only major industrialized economy where that ratio is roughly stable and in slight decline. Many other economies, Italy and Japan in particular, are seeing the dependency ratio blow out and hence their productive capability. We would welcome the opportunity to engage with you and your staff on any ideas that you may have. Right now, we are committed to the fulsome, regular cadence of Treasury issuance as it is. I do believe that we are in another industrial revolution, an AI revolution, that may lead to a productivity breakthrough that could be very important.
Representative Schweikert (R-CA): Do you agree that this Committee has not spent enough time, under either party, on debt management, despite our responsibility to work with Treasury to ensure stability, especially as we are now borrowing about $72,000 per second? Bessent: I can tell you the thing that would give us the greatest debt stability is increasing the debt ceiling.
Representative LaHood (R-IL): What will this Bill do for the economy on predictability and certainty? Bessent: What we are doing is trying to get back to President Trump’s private sector job growth creation and this Bill will incentivize private sector growth. Equally important, this administration’s economic plan is a three-legged stool. It is trade, taxes, and deregulation. What we saw under the Biden administration that created the great inflation was the impetus in spending as the government flooded the zone, but we saw substantial regulatory increase and demand shocks were met with supply constraints. With the help of this Committee, we are creating a private sector demand shock that is going to be met with a deregulatory release. We will go back to 2018 and 2019, we will have strong growth, and it will be non-inflationary.
Representative Sanchez (D-CA): Do you still believe that the President’s tariffs are going to be a one-time price adjustment for American families? Bessent: If prices go up, they will be one-time.
Representative Sanchez (D-CA): Do you think that China is a reliable trading partner? Will you commit to consulting with Congress on a trade deal with China? Bessent: I think we will see. They met their agreements under President Trump in 2020, and President Biden did not enforce them, and the Chinese delegation told me that they did not believe they needed to adhere. I raised many of your concerns to the Chinese delegation, and it will be a longer process. The trade deal was for a specific goal, and it will be a much longer process. I will note that the previous administration did nothing.
Representative Sewell (D-IL): Based on CBO scoring, will the Bill add to national debt? Bessent: It remains to be seen, btu the CBO also said the tariff income over the 10-year window would be $2.8 trillion. If you want to talk about dynamic scoring, there is nothing dynamic about that. You are quoting the CBO. I am quoting the CBO. Let us level set.
Representative Sewell (D-IL): When do you foresee us hitting the debt ceiling? Bessent: The so-called X date is a moving target. Some point in the middle to late summer but it is imprecise.
Representative Estes (R-KS): Are the fears that Wall Street has on Section 899 grounded in truth, and what is behind the stir? Why was there no outcry from Wall Street and economists during the last administration working with the OECD in a manner that put America last? Bessent: There is quite a bit of misinformation on 899, and much of the pushback is coming from overseas. Overseas companies are worried that their countries may try to usurp U.S. authority. If a European country tries to unfairly tax a U.S. company or take money away from the U.S. Treasury, then it would fall, perhaps, on that corporate capital. This is a fiscal bill, not a revenge bill.
Representative Estes (R-KS): Why is it critical to return to immediate R&D expensing, hopefully on a permanent basis? Bessent: We are the undisputed technological leader in the world, and one of the reasons for that is the expensing of R&D. We are pushing very hard to make this the best location for high-tech investing, biomedicine, or any other manufacturing process that we want to bring back. Part of the problem is that the manufacturing process has been separated from the R&D process. We need to have both of them here, sitting side by side in the U.S.
Representative Smucker (R-PA): Do you agree we are taking steps responsibly by finding savings that improve efficiency without adding to the debt assuming conservative growth estimates? Bessent: Yes. The CBO produces a black box, and that black box says the growth is 1.7 or 1.8 percent, whether we make the TCJA permanent and continue, and that permanence causes stimulus, or whether we have the largest tax cut in history, which would be cataclysmic. But it also assumes no change in growth, and obviously both cannot be true.
Representative Smucker (R-PA): Do you still hope to achieve a three percent debt-to-GDP and deficit-to-GDP by the end of Trump’s term? Bessent: Yes. A deficit-to-GDP, which the other side of the aisle does not seem to want to talk about, and the total debt-to-GDP, which Secretary Yellen and I agree on, are the two numbers that matter. The absolute number, while daunting, those two ratios are much more important. We would like to have a three in front of the deficit-to-GDP by 2028, the end of President Trump’s term, which is the long-term average.
Representative Hern (R-MO): Will you commit to working to put a nail in the coffin of the global tax deal once and for all given that the last administration gave away U.S. leverage and jurisdiction to the OECD, and that this deal functions as a loaded gun aimed at nonparticipating countries? Bessent: My staff met with the OECD in Paris just last week, and we are pushing back and working toward a solution as soon as possible.
Representative Hern (R-MO): Why is implementing full expensing for factories and restoring 100 percent expensing for equipment and machinery so important to move quickly on, and what it will do for our economy? Bessent: It provides great certainty but more than that, it provides the impetus for businesses to make capital allocation very quickly and in a way that puts us on an even playing field with the countries that heavily subsidize their industry. In the U.S., we do try not to. Some administrations, like the past one, try to pick winners and losers. We do not. We try to set the best playing field and create the best environment. The certainty of immediate expensing is very powerful in terms of after-tax return on capital. After-tax return on capital is what drives the U.S. as the greatest economy and productivity.
Representative Miller (R-WV): Can you commit to continuing working on securing fairness for our domestic steel industry across trade deals, such as the Section 232 tariffs and ensuring a level playing field is also applied to the U.S.-UK Economic Prosperity Deal? Bessent: The President’s commitment to the U.S. steel industry is unwavering. We are bringing back domestic production. What we have seen, and in response to one of the previous questions about whether China is a reliable partner during COVID and since then, is that there are strategic industries in the U.S. where we must have an industrial base, and I would put steel in the top three.
Representative Boyle (D-PA): Is the World Bank wrong, having just slashed its U.S. growth projection by over forty percent and citing trade uncertainty caused by your administration as the primary reason? Bessent: I would not have had previous success in my career if I followed World Bank projections.
Representative Murphy (R-NC): How will the U.S. help companies facing increased input costs and decreased export competitiveness stay competitive while maintaining the current tariff strategy? Bessent: The most powerful thing we are going to do is give them great certainty in the permanence in this tax Bill. We will also allow 100 percent expensing both for the new equipment and for factory structures, which will provide a substantial savings and impetus. So I believe that will aid in the manufacturing here. We are also working with industry across a wide range. We will see some companies make less, some will make more.
Representative Murphy (R-NC): Given that transshipment by Chinese companies has undermined President Trump’s Section 301 tariffs and that the problem appears to be worsening, can you elaborate on whether there have been any discussions with China about transshipment or if such discussions are planned? Bessent: As you can imagine, they pushed back on the de minimis exemption, which we have gotten rid of, and we are going to be tariffing all the de minimis imports. We are going to set a level not only for Chinese imports, although China floods the zone. That is because their business model is to export their deflationary impulse, which is unacceptable to the rest of the world, especially for U.S. citizens. We are going to set a global level for these de minimis imports.
Representative Kustoff (R-TN): What is your current assessment of the bond markets and your view of the recent upward pressure on Treasury yields? Bessent: Current assessment of the bond markets can be broken down into three pieces. First, the smooth functioning of the market remains intact, even during April’s period of high volume and volatility, trades cleared without any concerns for financial stability. Second, Treasury bond issuance is proceeding effectively, with an increase in participation from primary purchasers as end-users who hold the securities rather than dealers or short-term traders. Third, the U.S. 10-year Treasury yield is the only major 10-year yield globally that is down year-to-date, underscoring continued stability in the U.S. bond market despite broader concerns or alarmist narratives.
Representative Kustoff (R-TN): Would you rather be Treasury Secretary than Chairman of the Federal Reserve? Bessent: I am happy to do what President Trump wants me to do and we are making great progress at Treasury. Career and political staff are working to enhance the economy for the American people, maintain the reserve status of the U.S. dollar, and make sure that the U.S. Treasury market, which is the largest, soundest, and bellwether for the world, maintains that status. I would like to stay in my seat through 2029 to do that.
Representative Beyer (D-VA): If you are cutting ninety deals in ninety days and the President retains the power to adjust tariffs at will, how can we reasonably expect the projected $2.8 trillion in new tariff revenues to be real? How can you claim the tariff revenue offsets the debt increase while also saying it will be eliminated through new trade deals? Bessent: Two things. It sounds like you are questioning the CBO because that is a CBO score, not my number. If you want to use CBO, let us use CBO. Two, they are claiming $2.4 trillion in new debt, and they are also saying $2.8 trillion in tariff income. Even in Washington math, that is plus $400 billion.
Representative Beyer (D-VA): Should America be preparing for Liberation Day 2.0 and what should we be planning for on July 2nd and July 9th? Bessent: There are eighteen important trading partners. We are working toward deals on those, and it is highly likely that those countries or trading blocs, as in the case of the EU, who are negotiating in good faith, that we will roll the date forward to continue good faith negotiations. If someone is not negotiating, then we will not.
Representative Stuebe (R-FL): How is Treasury working with USTR and other agencies to ensure that financial and trade policy is aligned with the America First agenda? Bessent: We work every day on that. These trade deals and situation did not happen overnight. It has happened over twenty or forty years. I agree with the President on not blaming the countries. They got away with it. It was the administration and Congress who let them get away with it. We are pushing back on high tariff countries and non-tariff trade barriers, which could include things like local content requirements, currency manipulation, and in the case of China and many other countries, subsidies to industry and labor.
Representative Tenney (R-NY): Is there a way to provide tariff relief and bring Canada back into the mix, both for industrial inputs, such as aluminum, and agricultural trade? Bessent: You referenced the balancing act that rebalancing trade constitutes. Canada has very discriminatory dairy tariffs on the U.S. that USTR believes are unfair. Even though it is under Commerce and USTR, my staff is happy to discuss what we can do to make manufacturing more resilient. We are dedicated to rejuvenating the manufacturing base, especially for areas that experienced the China shock. The new Canadian government has made good progress in correcting some mistakes from previous leadership, so we are on a more sustainable path. I will be traveling with the President to the G7 on Sunday, and I would expect that we will be meeting with Prime Minister Carney.
Representative Fischbach (R-MN): What impact would not passing the Bill have on farmers and the agricultural industry? Bessent: The positive is that Treasury is working very hard to reinvigorate community banks and small banks responsible for seventy percent of all lending. That is one of the best things we can do. In our trade negotiations, we are constantly pushing to open other markets that have high non-tariff barriers, or sometimes tariff barriers, on U.S. agriculture products. We are pushing substantial purchase agreements for U.S. farmers. On the other side, no one will do well if the Bill fails. The largest tax increase in history does not help anyone. Farmers are sophisticated, with large equipment needs, and immediate expensing for new equipment matters. I had some businesspeople tell me earlier this week that they were waiting for the Bill. They know they will be able to get 100 percent expensing, retroactive to January 20th as the President said in his address to Congress, but they need 100 percent certainty because so many of your constituents operate on razor-thin margins. Without the certainty of the Bill or knowing they will get 100 percent expensing, they will not be able to buy the new equipment that will yield higher returns.
Representative Fischbach (R-MN): Will you commit to expedite the 45Z guidance, given how the Biden administration’s delay in finalizing guidance on 45Z created serious uncertainty in the biofuels industry? Will you work with the Committee to make the credit as strong as possible for American farmers? Bessent: I am happy to put my staff in contact with yours immediately. We want to get this done quickly. What we are trying to make sure that 45Z is more of a North American product and that there are not overseas actors, specifically Chinese companies backdooring into it through Mexico. Absolutely, we will work quickly with your staff.
Representative Schneider (D-CO): Do you agree it is a good thing that the U.S. is the top destination for foreign direct investment and that investors want to invest here? Is it not part of what the President and you are trying to do is to provide incentives for foreign companies to bring jobs back to the U.S.? Bessent: Always. We are providing it for all companies to bring jobs back to the U.S. On Section 899, we should not welcome foreign countries taking U.S. companies’ tax revenue for their own treasuries.
Representative Panetta (D-CA): Did the last Trump administration bring the China Phase One deal to Congress for a vote? Bessent: No.
Representative Panetta (D-CA): Under Trump’s China Phase One agreement, did companies have access to any neutral dispute resolution process or panel when obligations were not met? Bessent: I would have to get back to you, I am not USTR.
Representative Panetta (D-CA): Do you still view the national debt as a security problem, as you stated in your confirmation testimony when you said we must get our fiscal house in order? Bessent: When I look in the mirror in the morning, I see a deficit hawk. I support everything to consolidate this debt, stabilize the debt-to-GDP, and bring down that ratio in a controlled manner. We did not get here overnight, and we are not going to fix it overnight. I would like to fix it by the end of the President’s term.
Representative Feenstra (R-IA): How will this Bill help rural America? Bessent: It is a multi-prong approach. Small and community banks finance seventy percent of loans so we are working to stabilize and unshackle them. Farm structures would count for immediate expensing in the bill, as would any farm equipment that would increase efficiencies, such as Section 179 depreciation. Certainty and permanence here are going to be very, very important. Within the past 48 hours with my Chinese counterpart, I told the Vice Premier that they did not make good on their ag purchases and that President Trump’s number one constituency is farmers, and we expect that will be made good.
Representative Feenstra (R-IA): How will creating certainty in trade policy, especially through tariffs and leveling the playing field, affect small businesses and large manufacturers over the next year, especially given our reliance on export markets for commodities like soybeans and corn? Bessent: This administration’s economic program is a three-legged stool: trade, tax, and deregulation. Trade has moved faster because the President used International Emergency Economic Powers Act (IEEPA) as an emergency power. I congratulate the Republicans for moving the Bill through the House under Speaker Johnson’s leadership, and we are working with your Senate colleagues. Senator Thune has given the date of July 4th. We will see. Deregulation is the third leg because we need government to be a partner, not an adversary. The regulation under the Biden administration acted as a tax and an expense on the American people per household, and it slowed economic growth. As these regulations come off, whether related to permitting or agriculture, the economic benefits will begin to kick in during the third and fourth quarters. By 2026, we will really take off. On trade, we are moving and want to move quickly, but these are big issues and we want to do it right. We will get those eighteen trade partners, and while we can achieve some certainty there, the real certainty we need is this Bill.
Representative Malliotakis (R-NY): As we approach the July 9th date to lift the pause on tariffs, should the administration should take a more targeted approach by focusing on the most egregious offenders and avoid reinstating tariffs on nations like Mexico, Canada, UK, India, Japan, and others that are working with us in good faith to reduce trade deficits and increase market access? Bessent: We are focusing on the most egregious cases. Many of the eighteen important trading partners represent the biggest problems, but many have come forward with good offers and are negotiating in good faith. It will ultimately be up to President Trump, but it is my belief that if a country is negotiating in good faith, an extension will be possible. In conversations with USTR and Ambassador Greer, I also believe that for smaller countries with lower levels of trade, we may be able to pursue a one-size-fits-all regional deal, which would cover a great deal of ground across those countries.
Representative Yakym (R-IN): Are you in conversation with any countries about their digital services taxes (DSTs) and undertaxed profit rule (UPR) measures that disproportionately target American companies, and what is the status of those conversations? How hard is the administration fighting and pushing back against DSTs and UPRs that target American companies? Bessent: Yes, and to be clear, we do not use Section 899 as a negotiating tool. However, other countries do extract substantial revenues from the U.S. Treasury and from our great internet companies, which are unique to the U.S. The DST is a particularly egregious example. Canada, while a close ally, is like a neighbor on the block that sometimes takes things for granted. They have implemented a DST and are collecting taxes retroactively. It is a centerpiece of our tariff negotiations. We are pushing back on tariffs, non-tariff measures, currency manipulation, government subsidies, unfair taxation, and the fines imposed by entities such as the EU on the same companies.
Representative Yakym (R-IN): Can you provide an update on the administration’s efforts, including coordination with Canada and Mexico, to advance a “fortress North America” strategy to counter China’s almost $2 trillion investment to expand factory production? Bessent: China accounts for approximately thirty percent of global manufacturing and is aiming to reach forty percent, which is unsustainable. I warned our allies that when we established our tariff wall around China’s goods and services would find other shores, including Europe, Canada, and Australia. Unfortunately, that warning proved accurate, with substantial price deflation from China, particularly in sectors like EVs. It is therefore critical to prevent transshipment, where goods move from China to Vietnam to the U.S. We emphasized this concern in discussions about “Fortress North America,” as the most significant transshipment risk is through Mexico or Canada under USMCA. Our trade partners have been very responsive and have made promising offers on this front.
Representative Miller (R-OH): How do you view the potential benefits of stablecoin legislation in strengthening domestic demand for treasuries and supporting broader access to credit products, with estimates that clear federal stablecoin legislation could unlock up to $2 trillion in new demand for U.S. Treasuries? Bessent: I have been in touch and had many discussions with your colleagues in the Senate as they advanced their stablecoin legislation, urging them to bring it to a vote as quickly as possible. U.S. dollar-backed stablecoins collateralized with Treasury bills, could become a substantial new buyer of U.S. Treasuries. Such legislation could help lock in long-term dollar dominance. A series of defining events have historically supported the dollar’s status as the global reserve currency. Passing stablecoin legislation could be that defining event for the 2020s.
Representative Miller (R-OH): Would pairing stablecoin legislation with clear, modernized tax guidance for digital assets offer the greatest chance of encouraging responsible investment and giving both individuals and institutions the confidence and certainty they need? Bessent: Yes.
Representative Moran (R-TX): Could you elaborate on the recent action by Treasury and IRS to provide taxpayer relief from the corporate alternative minimum tax (CAMT) and preview any future action the administration might take following the decision not to finalize the proposed regulations in their current form? Bessent: The CAMT is part of an overall simplification effort for businesses, and we have aimed to implement that consistently across the board. As several Republican members have noted, this is a pro-business administration. I would characterize the previous administration as having few businesspeople and being composed primarily of academics and career politicians.