Trade deals imminent but no China talks; Bessent testimony takeaways

WASHINGTON – Treasury Secretary Scott Bessent defended the Trump administration’s economic policies during his first public appearance on Capitol Hill since President Donald Trump’s tariffs upended the U.S. economy.

In a May 6 hearing with the House subcommittee responsible for turning the Treasury Department’s budget proposal into law, Bessent suggested the Republican administration could announce tariff deals with U.S. trading partners as early as this week. The Trump Cabinet member said that even as he acknowledged the U.S. had not yet begun negotiating with China, the other largest economy in the world.

Here are six takeaways from his testimony.

Tariff deals could be announced this week

Rep. David Joyce, R-Pennsylvania, asked Bessent what Americans can expect to see on tariffs a year from now.

Bessent said that will depend on our “trading partners,” the 17 other countries the administration is negotiating with.

Those countries have brought “very good offers” to the table with the United States, he said, and the negotiations are “proceeding very well.”

Deals could be announced as early as this week, he added.

“I would be surprised if we don’t have more than 80 or 90% of those (trade deals) wrapped up by the end of the year,” Bessent said.

No negotiations with China

However, Bessent said that Trump is not talking with one of the country’s 18 largest trading partners: China.

That contradicted previous claims from Trump that the U.S. is engaging with Beijing about tariffs.

Earlier this year, Trump administration imposed tariffs totaling 145% on imports from China, prompting Beijing to slap 125% tariffs on U.S. exports.

Bessent has said it’s up to China to de-escalate the trade tensions because they sell more goods to the U.S. than the U.S. does to China. Trump has signaled multiple times in recent weeks that trade talks with China are underway.

Cuts ahead at the IRS

Bessent told the House panel that the Internal Revenue Service spent around $450 million on paper processing with 6,500 full-time staff members dedicated to the task last year.

Through “policy changes and automation,” the administration aims to reduce that expense to under $20 million, he said.

He touted $2 billion in cuts already levied on the IRS’ information technology budget “without any operational disruptions.”

“The IRS still needs significant reforms to deliver efficient and cost-friendly results for the American people,” he said.

‘X-date’ still unclear

Rep. Steve Womack, R-Arkansas, asked Bessent when the “x-date” is, the date by which the U.S. would default on its debt if the debt ceiling is not raised.

Bessent said his agency is still tallying total revenues from tax day in mid-April.

“We are on the warning track,” he said. “And when you’re on the warning track, it means the wall’s not far away.”

However, he assured members that the U.S. government will “never default” and that they will raise the debt ceiling.

Raising the debt ceiling is included in the massive party-line bill Republicans in Congress are working on to implement Trump’s agenda. Lawmakers hope to pass it by July 4.

No recession

Rep. Steny Hoyer, D-Md. asked Bessent whether he believes that the U.S. is currently in a recession.

“I believe in data, and there is nothing in the data that shows that we are in a recession,” Bessent responded. “As a matter of fact, the jobs report has surprised to the upside.”

An economic report released last week indicated that U.S. GDP contracted at an annual rate of 0.3% during the first quarter. That’s because imported goods swelled an eye-popping 50% annualized as companies raced to order foreign merchandise before tariffs kicked in. Imports are subtracted from U.S. GDP because they’re produced in other countries.

Bessent argued that the numbers could be revised and that he expects they will be changed after looking at a detailed analysis.

‘Scary’ national debt must be mitigated

Rep. Chuck Edwards, R-North Carolina, asked Bessent when the U.S. debt levels would no longer be sustainable. At the beginning of April, the national debt was $36.2 trillion.

Bessent said it is “difficult to pinpoint” the exact moment, but said it “would look like a sudden stop in the economy as the credit would disappear as markets would lose confidence.”

“I’m committed to that not happening,” he said.

The debt is “scary,” he said, but the key will be reducing spending while growing GDP.

GDP contracted during the first quarter of the year, and Republicans in Congress are currently working on a bill that non-partisan experts estimate could add around $5.8 trillion to the deficit.

Edwards asked: When is the tipping point?

“What the market is more concerned about is a trajectory. Are you on a trajectory that is unsustainable or are you bending the curve?” Bessent said, adding that the goal is to use both growth and spending restraint to solve the problem.

Joey Garrison contributed.