US Treasury Secretary Bessent stated that the 50% tariff threat is a response to the pace of negotiations with the EU, hoping it will prompt the EU to act more quickly. He anticipates that before the 90-day tariff suspension ends, the US will reach agreements with other countries, with negotiations with India already in deep waters. He looks forward to Apple’s contribution to chip security. The Supplementary Leverage Ratio (SLR) may be modified this summer, potentially lowering US Treasury yields by several basis points.
It is projected that by 2028, the US budget deficit as a percentage of GDP will be in the “3% range,” partly reliant on tariff revenues. Bessent also downplayed the recent weakening of the dollar and dissociated US Treasury fluctuations from US tax legislation. After Bessent’s speech, US Treasuries rose, and the dollar fell. On Friday, US Treasury Secretary Bessent spoke about Trump’s latest round of tariff threats. He mentioned that Trump’s 50% tariff threat against the EU is aimed at accelerating EU action and expects Apple to play a role in the security of the chip supply chain. He stated that several major trade agreements will emerge in the coming weeks, with negotiations with India already in deep waters. Bessent revealed that the SLR might be modified this summer, which could lower US Treasury yields by several basis points. Bessent attempted to dissociate US Treasury fluctuations from US tax legislation and also downplayed the recent weakening of the dollar. Earlier on Friday, Trump threatened to impose a 50% tariff on EU goods starting from June 1st, stating “our negotiations with them have made no progress.” Last month, the US set a 20% tariff on the EU, significantly lower than the 50% proposed by Trump on Friday. According to CCTV News, after President Trump threatened a 50% tariff on the EU and a 25% tariff on Apple, Apple’s stock price, US stock index futures, and the euro fell, rekindling investors’ concerns about the impact of tariffs on the global economy and trade. The European Commission stated on the 23rd local time that it would not comment on new US trade tariff movements until Commissioner for Trade and Economic Security, Sestovic, speaks with US Trade Representative Greer. Later that day, the two parties will discuss trade issues over a call. On Friday, US stocks opened across the board lower, with the three major US stock indices falling more than 1% in the morning session, although the decline narrowed later. Last week, Trump stated that Bessent understands the market, and everything rises when Bessent appears on television. The tariff threat is to speed up the EU. Before the US stock market opened on Friday, Bessent said that the 90-day suspension of tariffs implemented on April 2nd was based on good faith negotiations. He expects that before the end of the 90-day period of equal tariffs announced by President Trump on April 2nd, the US will announce trade agreements with other countries successively.Several significant trade agreements are expected to emerge in the coming weeks. Bessent refused to disclose which countries the United States anticipates reaching agreements with in the near future. Bessent revealed that negotiations with India have entered a critical phase. He stated that the United States has made substantial progress in trade negotiations with Asian countries like India. “These agreements are moving quickly, and I believe as the 90-day deadline approaches, we will see more and more agreements being announced.
Many Asian countries have proposed very attractive deals.” Bessent noted that most of the United States’ trade partners are negotiating “in good faith,” with the European Union being an “exception.” Trump views the EU’s proposals as less favorable compared to other countries, and the 50% tariff threat is a response to the slow pace of EU negotiations, hoping to prompt the EU to act more swiftly. “I think this is a reaction to the slow pace of EU negotiations. I hope this will put some pressure on the EU.” Bessent reiterated that he believes the EU has a “collective action problem” in negotiations due to the need for a unified stance among its 27 member states. Bessent is optimistic about Germany’s role in driving progress within the EU, with hopes of a renewed US-German relationship under Chancellor Merz. In negotiations with multiple Asian trade partners, Trump has designated Bessent as the chief representative, while US Commerce Secretary Howard Lutnick leads the consultations with the EU.Regarding Apple’s role in chip supply chain security, Bessent expressed anticipation for Apple’s contribution. On the tax reform bill passed by the House earlier this week, Bessent stated that Senate Majority Leader John Thune plans to “immediately push the bill forward,” expecting the Senate to make minimal changes to the budget bill, with caution advised on the timing of the tax bill. Bessent called for the Senate to keep the July target in mind during the tax legislation process. Bessent indicated that the Republican tax draft provides permanent low-level tax rates, offering certainty. Bessent mentioned that this tax season’s revenues have exceeded targets. In response to concerns that the Republican tax reform bill could raise the debt ceiling, leading to a worsening of the US debt-to-GDP ratio, Bessent countered. He stated: This bill will stimulate growth, thereby reducing the debt ratio. I am not worried about the US debt dynamics because a change in the growth trajectory will largely resolve these issues. As long as the US economy grows faster than debt, the debt issue can be controlled. If we can change the country’s growth trajectory, we can stabilize the finances and escape debt through growth.
It is projected that by this time next year, the US GDP growth rate will exceed 3%. Bethune anticipates that by 2028, the US budget deficit as a percentage of GDP will drop to a level starting with ‘3%’, partly relying on tariff revenues to alleviate fiscal pressure. Bethune is ‘very optimistic’ about the deficit outlook. He acknowledges that while the increase in revenue from tariffs is helpful, it will never be sufficient to cover the massive annual expenditures. He also stated, ‘There is a balance point for tariffs, and I believe we will eventually reach that point. ‘ As tariff and non-tariff barriers decrease and trade frictions diminish, this will bring in hundreds of billions of dollars in revenue annually, also implying a reduction of several hundred billion dollars in US Treasury issuance. Bethune also pointed out that there is significant resistance in Congress to cutting expenditures. He specifically mentioned Musk’s push for the Department of Government Efficiency (DOGE), ‘I consider that one of the most important events in my life, and I am committed to not letting the bureaucracy slow its development. We need to control costs, improve government efficiency, and truly serve the people.’ Bethune also indicated that the Trump administration has put on hold the plan to create a sovereign wealth fund, as the president prioritizes paying off the national debt. ‘I believe the president has decided to suspend this plan so that we can continue to deal with other things we are currently doing. He said the other day that we might spend more time paying off debt. He is focusing on debt repayment.’ Regarding US debt and the dollar, Bethune said he is not particularly concerned about market sentiment and is not worried about the market’s reaction to government policies. Bethune tried to dissociate the fluctuations in US debt from US tax legislation. He stated that the idea that ‘the bond market will fluctuate due to US tax legislation’ is incorrect, as the trend in US bonds is global and should not be overinterpreted. However, it should be noted that Bethune’s statement differs from the general consensus in the industry. This week, even the Federal Reserve’s popular governor, Waller, stated that Trump’s tax cuts triggered a sell-off in US debt. In terms of financial regulation, Bethune said that adjustments to the Supplementary Leverage Ratio (SLR) are very close, and it is possible that the SLR will be modified in the summer, which could affect the yield on US Treasury bonds, potentially suppressing it by several dozen basis points. Bethune indicated that regulatory authorities may relax market capital rules, promising SLR reform, thereby reducing yields, which propels US Treasury bonds to continue to rise, with long-term US Treasury bond yields falling: the 30-year US Treasury bond yield slightly dropped from around 5.05% to close to 5.03%, turning negative for the day. The 20-year US Treasury bond yield also fell from the 5. 06% level to 5%.
Below 0.04%. The 10-year US Treasury yield fell by approximately 2 basis points, approaching 4.5%, with an overall drop of about 2 basis points during the day. The two-year US Treasury yield remained stable below 3.98%. Bessent discussed the trend of the US dollar, noting that other countries’ currencies are appreciating, not the dollar depreciating, and such fluctuations should not be viewed as a “weak dollar.
” After Bessent’s comments on the dollar, it declined: the Bloomberg Dollar Spot Index fell 0.7% during the session, reaching 1211.92 points, marking a new low since December 2023, approximately a year and a half; the ICE US Dollar Index decreased by 0.8%, reporting 99.13 points, approaching the April 21st low of 97.92 points and the March 2022 low of 96.63 points. On Friday, safe-haven currencies such as the yen and Swiss franc followed gold’s rise. Other key points from Bessent’s speech on Friday included: deregulation is expected to boost US economic growth in the third and fourth quarters of 2026. Efforts are being made to attract global capital into the United States; following trade agreements, the privatization of Fannie Mae and Freddie Mac will be advanced; Bessent referred to Trump’s “old rival” Harvard University as “a huge hedge fund. ” Risk warning and disclaimer: The market is risky, and investment should be made with caution. This article does not constitute personal investment advice and has not taken into account individual users’ specific investment objectives, financial conditions, or needs. Users should consider whether any opinions, views, or conclusions in this article are suitable for their particular situation. Responsibility for investment decisions based on this article is assumed by the investor.
