Key Takeaways
- Treasury Secretary Scott Bessent anticipates a strong chance of Stephen Miran being seated as a Federal Reserve Governor before the September meeting, despite the Senate confirmation process likely extending beyond that timeframe.
- Bessent is actively urging the US Solicitor General to defend Trump-era tariffs in federal court, warning that a ruling against them would lead to "dangerous diplomatic embarrassment" and undermine international negotiations.
- The administration faces a significant legal challenge after the US Court of International Trade previously ruled Trump's tariffs illegal, with Bessent projecting tariff revenues to substantially exceed $300 billion for federal debt reduction.
- Miran's interim appointment is seen by some as a "seat warmer" role, and his past criticisms of Fed monetary policy align with former President Trump's push for lower interest rates.
- Bessent has acknowledged that tariffs impact businesses like Walmart (WMT) and may lead to higher consumer prices, a shift from earlier claims that foreign nations would absorb the costs.
Treasury Secretary Scott Bessent is navigating a dual front, expressing confidence in Stephen Miran's imminent appointment to the Federal Reserve Board of Governors while simultaneously mounting a vigorous legal defense of former President Donald Trump's sweeping tariffs. These developments underscore the administration's focus on both monetary policy influence and aggressive trade stances.
Miran's Path to the Federal Reserve
Scott Bessent stated there is a "very good chance" that Stephen Miran will be seated as a Federal Reserve Governor before the September meeting of the central bank. President Trump officially nominated Miran to the Federal Reserve Board of Governors in August, following the resignation of Governor Adriana Kugler. Miran, who previously chaired the White House's Council of Economic Advisers and holds a doctorate in economics from Harvard, is a seasoned veteran of Trump's administrations.
Miran's nomination is for an interim period, set to conclude on January 31, pending Senate confirmation. While Bessent is optimistic, some experts suggest it is unlikely the Senate will vote on his confirmation until after the Fed's next meeting, scheduled for September 16-17. Miran has been described by some as a "seat warmer" for a short term. He is known for his strong support of Trump's tariffs and has previously criticized the Fed's monetary policy, aligning with Trump's consistent calls for lower interest rates.
Defending Trump's Tariffs in Court
Concurrently, Bessent is preparing to urge the US Solicitor General to defend Trump's tariffs in federal court. [Headline] The Treasury Secretary, along with Commerce Secretary Howard Lutnick and Secretary of State Marco Rubio, has informed a federal appeals court that ruling the tariffs illegal would severely damage US foreign policy. Bessent specifically warned of "dangerous diplomatic embarrassment" and stated that such a ruling would undo months of crucial international negotiations with key partners like the European Union, Japan, and South Korea.
This legal battle follows a May ruling by the US Court of International Trade, which found Trump's tariffs illegal, asserting that tariff power resides with Congress, not the President, under a 1977 emergency powers law. The administration is now seeking to put any adverse ruling on hold until the Supreme Court can issue a final decision, arguing that failing to do so would have "devastating and dire consequences."
Economic Implications and Shifting Stances
Bessent anticipates that revenues from the tariffs will "substantially" exceed his earlier estimate of $300 billion, with plans to utilize these funds primarily for reducing the federal debt rather than providing rebate checks to Americans. He previously characterized the tariffs as a "negotiating strategy" that successfully brought over 75 countries to the negotiating table.
However, Bessent's stance on the tariffs' economic impact has evolved. He has recently acknowledged that businesses, including major retailers like Walmart (WMT), are feeling the effects of the trade war, and some of these increased costs may be passed on to consumers. This admission contrasts with earlier assertions that foreign nations, particularly China, would bear the full burden of the tariffs. Former President Trump has publicly criticized Walmart for attributing price increases to the tariffs. Bessent has also advised US trading partners against retaliating against Trump's new set of tariffs, which include a 10% universal baseline and higher rates for specific nations like China (54%) and the European Union (20%).
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.