The traditional gathering of former Treasury secretaries to welcome a newly minted one into the fold is usually a lighthearted and pleasant affair. But when the group convened this month, on President Trump’s “Liberation Day,” the tone was strikingly serious.
The dinner, organized by former Treasury Secretary Steven T. Mnuchin, took place at a moment of tumult for the U.S. economy. The president had upended global trade with punishing tariffs on both allies and adversaries, and Treasury Secretary Scott Bessent was at the center of it, defending a policy that many in the room viewed as economic malpractice.
“The mood was somber,” said W. Michael Blumenthal, 99, who led the Treasury Department in the Carter administration and was in attendance.
Mr. Bessent was pressed over the strategy behind the tariffs and the impact that they would have on the economy, according to Mr. Blumenthal and other people familiar with the dinner. At times, Mr. Bessent elevated his voice when his predecessors confronted him about Mr. Trump’s approach.
“He didn’t just smile,” Mr. Blumenthal recalled. “There he is — he has to defend it.”
The guest list included Robert E. Rubin, Henry M. Paulson, Lawrence H. Summers, Timothy F. Geithner and Jack Lew. Former Treasury Secretary Janet L. Yellen was traveling in Australia and did not attend, a spokesman said.
The Treasury Department declined to comment on the dinner, and Mr. Bessent declined to comment for this article.
The bumpy welcome was reflective of Mr. Bessent’s first few months in what might be the most difficult job in Washington. Wall Street hailed his nomination in hopes that he would be a voice of moderation who could temper Mr. Trump’s instincts to lob scattershot tariffs around the world.
Now Mr. Bessent, 62, is at the center of an ugly trade war with China that economists fear could reignite inflation and cause a global recession. By most metrics, the U.S. economy was the strongest in the world when Mr. Trump took office in January, leading some analysts to describe the president’s actions as a historic self-inflicted wound akin to a soccer player’s scoring a goal against his own team.
“It’s one of the largest own-goals in diplomacy and economics and trade that I think we’ve ever done,” said David Autor, an M.I.T. economist.
Before joining the administration, Mr. Bessent had expressed his own doubts about tariffs. But Mr. Trump’s protectionist trade instincts are notoriously hard to corral.
As a former hedge fund manager who founded Key Square Group, Mr. Bessent wrote in a letter to investors just last year that he was skeptical of tariffs: “Tariffs are inflationary and would strengthen the dollar — hardly a good starting point for a U.S. industrial renaissance.”
But as Treasury secretary, Mr. Bessent has had to publicly stick close to the administration’s pro-tariff stance. He now argues that tariffs will not be inflationary but will instead inflict a one-time “price adjustment” on the economy.
Some of his comments have raised eyebrows. After China responded to Mr. Trump’s tariffs by imposing higher levies on American products, Mr. Bessent downplayed the potential impact on the U.S. economy, saying “So what?” In his view, the United States holds the upper hand, because China is reliant on exports to America.
Two days later, Beijing retaliated with even stiffer levies, escalating the economic fight between the world’s largest economies and sending jitters through financial markets.
As markets suffered their worst rout in years, Mr. Bessent suggested that people close to retirement were probably not paying much attention to the falling value of their nest eggs.
“Americans who want to retire right now, Americans who have put away for years in their savings accounts, I think they don’t look at the day-to-day fluctuations of what’s happening,” he said on NBC’s “Meet the Press” last Sunday.
The Democratic National Committee seized on Mr. Bessent’s comment that the economy is in “pretty good shape,” noting that the stock market had been tanking.
Mr. Bessent has been thrust into a somewhat uncomfortable position given that the administration’s trade agenda has been more aggressive than most experts anticipated.
Mr. Trump imposed tariffs on nearly every country, including levies of at least as 145 percent on Chinese imports. The moves sent stocks plunging, strained the bond market and led economists to raise their recession odds.
Some top Republican lawmakers, including Senator Ted Cruz of Texas, have also come out against the tariffs. Mr. Cruz warned on the latest episode of his podcast that tariffs are taxes on consumers.
“It’s terrible for America,” he said. “It would destroy jobs here at home and do real damage to the U.S. economy if we had tariffs everywhere.”
Mr. Bessent has managed to moderate Mr. Trump’s approach, to a degree. During a trip to Mar-a-Lago last Sunday to brief the president on the volatility, Mr. Bessent persuaded him to pause so-called reciprocal tariffs on dozens of countries and begin trade talks with those nations. Upon returning, Mr. Bessent, who had maintained that he was mostly focused on tax policy, said he was taking a leading role in trade talks.
However, the deepening confrontation with China suggested that there will be more volatility as Mr. Bessent engages in debates with Peter Navarro, Mr. Trump’s trade adviser, and Howard Lutnick, the commerce secretary, who have counseled a more hawkish approach.
“The best part is that he can be there as an adviser,” said Marlene Jupiter, who worked with Mr. Bessent for five years when he ran Bessent Capital. She said his deep knowledge of markets should help calm investors who were nervous about the trade uncertainty, but “I don’t know how much Trump listens or does not listen.”
The Treasury secretary’s inability to restrain Mr. Trump more effectively has dismayed some investors.
“In the sense that I’m disappointed in Bessent, it’s that Mnuchin and Cohn never let it get this far,” said Spencer T. Hakimian, the founder of Tolou Capital Management, a New York hedge fund. Mr. Mnuchin, as Treasury secretary, and Gary Cohn, as director of the National Economic Council, were two economic advisers in Mr. Trump’s first term who warned him against the overuse of tariffs.
“The whole reason why markets were interested in Bessent,” Mr. Hakimian added, “is because they saw him as being Mnuchin 2.0 — a traditional Wall Street guy who would not let it get to this.”
Mark Sobel, who served at the Treasury Department for nearly 4 decades, noted that Mr. Bessent was being credited with scaling back the reciprocal tariffs but raised questions about how he has publicly justified them.
“It will be hard for Americans to see him as a credible and serious economic spokesperson given comments such as that the tariff ups and downs were the strategy all along, or citizens shouldn’t fret about day-to-day stock market fluctuations when their 401(k)s are tanking,” Mr. Sobel said.
Ultimately, however, final decisions over tariffs will lie with Mr. Trump.
“While the Treasury secretary is seniormost economic official in administration, the president is the captain of any team,” said R. Glenn Hubbard, a former deputy assistant secretary at the Treasury Department. “Whatever the Treasury secretary says needs to be on the same page as the president.”
During the dinner with Mr. Bessent, the former secretaries offered encouragement, counsel and historical perspective amid their concerns about Mr. Trump’s policies, people familiar with the matter said.
In one exchange, Mr. Summers, who served in the Clinton administration, told pointed stories about George Shultz, who was nominated to be Treasury secretary by President Richard M. Nixon in 1972 and stood up to his boss over defunding universities and using the Internal Revenue Service to audit political enemies.
In a recent social media post, Mr. Summers said that if he were still in government, he would have resigned over the analysis that the Trump administration produced to support its tariff plan.
Mr. Blumenthal said he wished Mr. Bessent luck in a job that is more complicated when “what is best for country is different than what the president wants.”
He added that traditionally the welcoming meals were light on policy discussion or advice from Treasury veterans.
“This time was a very special occasion,” Mr. Blumenthal said.
Ana Swanson contributed reporting.
