Watch CNBC's full interview with Treasury Secretary Scott Bessent

We're joined now, I'm very happy to say, by Treasury Secretary Scott Besant this morning. Mr. Secretary, it's a pleasure to have you on. It's been a while. It's good to see you. Good morning, Joe. Market is trading higher today, and we did see what was welcomed yesterday, and that is a bounce from some of the lows and even a higher close on the NASDAQ. One of our guests, Mr. Secretary, earlier mentioned the resumption of the trade put, and not coincidentally, it coincided with your trip to Florida over the weekend where reportedly you were stressing that the market needed to hear that negotiations about these tariffs were in play. Lo and behold, we did see a bounce. Is that a fair assessment? Do you think that's what happened? Well, it's not a fair assessment of what happened over the weekend. I went down to see President Trump, as I do many weekends, and I can tell you, it's all President Trump's decision, and he had a view on, after Liberation Day, that we should go into quiet mode and let our partners think about the shock and awe that he presented. And over those following few days from April 2nd, we had, I think we're up to 70 countries contact the White House for how to come and negotiate. So I would say that the negotiations are the result of the massive inflow of inbound calls to come and negotiate. It had nothing to do with the market. I think the market took some solace, though, in kind of a change in the perspective. Just last week, we were hearing no negotiations. Now, we're talking about, you mentioned 70 different countries. Japan, I guess, was early in terms of placing a call to the White House. And now, in earnest, you and the U.S. Trade Representative are going to begin negotiations with Japan. I think that some of the stability in the markets, there's no doubt that's what I think helped massage the markets, in some extent. Well, look, my advice on April 2nd to our trading partners was not to panic, don't escalate, and then we will see where President Trump is after a period of days or weeks. The response was overwhelming. So it was after a period of days. And he decided that it would be a good time to begin negotiating. The Japanese were very good actors. The president had a very good call yesterday with the Japanese prime minister that led to these negotiations. And look, the Japanese are military partners. They're economic partners. We have a substantial imbalance with them. And I'm sure that they are as anxious as we are to get this remedied. Mr. Secretary, we spoke yesterday with Peter Navarro. And he described his view on these things as it's not enough to get to zero tariffs. You have to take down all the non-tariff barriers that exist as well. His proposal, as he's written about today, is to get rid of the VAT, the value-added tax, on top of a lot of other things. That is what it would take for us to reach any sort of a settlement with Europe. Are you in the same frame of mind as Peter Navarro is when it comes to that? I think everything is on the table. So there are tariffs. The academic literature shows that it's actually the non-tariff barriers, which are both harder to quantify and harder to... They're more insidious because they're hidden. They're obfuscated. So tariffs, non-tariff barriers, currency manipulation, and then subsidies to both labor and industry. So everything's on the table, Becky. Meaning that it would take all of those things for us to reach any agreement that would make any sense? I mean, the value-added tax isn't directed at us. It's a tax that every manufacturer, including those that are based in Europe, pay as well. It's more the equivalent of a sales tax like we impose here. Well, again, I think there's going to be a lot of back and forth. President Trump is going to be personally involved in the negotiations. And we will see what our trading partners offer. For instance, there is talk of a big energy deal in Alaska where the Japanese and perhaps the Koreans, perhaps the Taiwanese would take a lot of the offtake and provide financing for the deal. So that could be an alternative for them to come forward with that, because not only would that provide a lot of American jobs, but it would narrow the trade deficit. So, Becky, everything's on the table. Mr. Secretary, though, help us just understand this. And maybe it's a very nuanced answer because there's sort of different component parts to this. So the president said yesterday with Netanyahu, quote, that these tariffs can be permanent tariffs and there can also be negotiations. We also had Peter Navarro, as Becky mentioned, and you just talked about saying that the whole goal of this is to bring manufacturing back to the U.S. And then there's been the discussion of trying to raise revenue as a function of the tariffs. All of those different ideas, to some degree, oddly enough, are at odds with each other, meaning if you're successful at creating revenue from the tariffs, you're not bringing jobs back to America necessarily, though that could be an offshoot of what happens. I'm trying to understand from your perspective whether these really are negotiations, they're not negotiations. What success at the end of the day actually looks like? Well, Andrew, a lot to unpack there. And, you know, let's just go through it piece by piece, that if we put up a tariff wall, the ultimate goal would be to bring jobs back to the U.S. But in the meantime, we will be collecting substantial tariffs. As I said, I believe on this show that if we're successful, tariffs would be a melting ice cube in a way because you're taking in the revenues as the manufacturing facilities are built in the U.S., and there should be some level of symmetry between the taxes we begin taking in with the new industry from the payroll taxes as the tariffs decline. Let me ask you a separate question, and maybe you can speak directly to the CEOs and business leaders who are watching this broadcast, along with perhaps policy leaders and others who are frankly running other countries. I've talked to a number of them who say, you know what? I'm going to sit back and just watch all of this play out. I'm not going to make any decisions about whether I'm going to bring manufacturing back to the U.S. or frankly, how much I need to negotiate with this administration. This is now other countries just yet, because depending on how the markets play out, depending on what you think is going to happen in Congress, depending on what you think is going to happen with the courts, all sorts of other things could happen first before I would need to make an actual decision as to either negotiating over the tariffs themselves or if I'm a business investing back in the U.S., because who knows what's going to happen not just in six months from now, but in two, three or five years from now when maybe my plant would actually come on board or online. Yes. So, Andrew, I think that may be what some of the countries are saying in public, but I can tell you I've seen the call list at the White House, and it's substantial. We were having a discussion last night about which countries to prioritize, and I think you are going to see some very large countries with large trade deficits come forward very quickly. I think we can, you know, if they come to the table with solid proposals, I think we can end up with some good deals. And, you know, part of the calculus on that may be that some part of the tariffs stay on. And I actually think, you know, as I said, that over the weekend, President Trump has maximum negotiating leverage right here, right now. And I think it would be a mistake for anyone to think otherwise. And many of, as I said, many of our trading partners have queued up, and they have kept their cool. They have not escalated, and they will get priority in the queue. I think it was a big mistake, this Chinese escalation, because they're playing with a pair of twos. Traditionally, if you look at the history of the trade negotiations, we are the deficit country. So what do we lose by the Chinese raising tariffs on us? We export one-fifth to them of what they export to us. So that is a losing hand for them. What about the business leaders who are watching right now, who are thinking to themselves, am I supposed to actually make a commitment right now to bring manufacturing back to the U.S., or should I let this ride and watch all of this play out first before I make any kind of decision? Well, Andrew, as you know, unlike we financial market operators, business leaders, they have substantial lead time. So I am sure that they are putting together plans for what they would like to do when we finish these negotiations. So I think, again, they're not going to snap their fingers, find a greenfield site and build a factory. But I am sure that the planning has already started in boardrooms because I spent the weekend talking to CEOs and investment bankers, and that's exactly what's happening. Mr. Secretary, the actual tariff rate on Japan is 4.3%. The number that President Trump's chart used was 46%. There has been a lot of conversation about how some of the numbers were arrived at and using that formula, which puts a lot of weight on trade deficits to try to take into account all of the other protectionist policies. But was there, I mean, there was kind of a lot of blowback on that formula. Do you think that that accurately represents what we're talking about, or was it an actual intentional effort to make things look worse in terms of the protectionism so that the United States, so President Trump could start at a much higher level for the retaliatory tariff? Well, Joe, a couple of things. I think if you look at the actual numbers, President Trump cut those in half. So if we wanted to create a canard to have a large negotiator, a non-credible or a very extended negotiating position, we would have started from the actual number. And I believe that by cutting it in half, then we have shown some willingness. President Trump believes in trade. He wants to have fair trade for the U.S. I wasn't involved in the calculations of the number, but what I can tell you is that we can see from these huge surpluses that some of these countries have. They've accumulated these gigantic surpluses over the years. That has to tell all of us that there are imbalances. And again, whether those imbalances are from the actual tariffs or non-tariff barriers, currency manipulation, or the state-favored funding, it's very difficult to disentangle. But those big surpluses tell me that there is a large imbalance and President Trump is committed, for the American worker, to fixing those imbalances. We're going to let you go, Mr. Secretary. I just wanted to shift a little bit to the notion that maybe in trying to extend the tax cuts from the 2017 bill, that maybe the top rate, that there's some openness with Republicans to raising that, letting that go back to over 39 or even 40 percent. And I don't know whether the president has signed off on that or whether he's amenable to it. I don't know whether you would be amenable to that, because it would raise the taxes on all kinds of small to medium-sized corporations if it went back there. Is that being considered? Joe, what I will tell you is I, along with NEC Chair Hassett, have the pen for the administration. We're in contact with President Trump. We have seen remarkable unity led by the president with the Republican leaders, with Leader Thune, Speaker Johnson, Senator Crapo, and Chairman Jason Smith on this bill. And it's moving very quickly. So I think the underreported story here is the Republican unity that President Trump has. And I think we will see the shapes and contours of the bill in the coming weeks and days. But I have been very impressed by how quickly this is moving forward. And this will be the certainty on this. You know, if we go back, everyone wants to talk about, oh, the terrorists are causing uncertainty. The thing I can tell you is getting this tax bill done quickly will give industry and American households incredible certainty. It just seems anathema to the whole intent of the original bill back in 2017. I mean, tariffs are like taxes to some extent, Mr. Secretary. So raising taxes there and then raising taxes, the top rate. So you won't dismiss that. You won't say that that's not on the table. That is possibly on the table, raising the top rate. I'm saying that we are negotiating. The House and the Senate are moving very, very quickly on everything. OK, Mr. Secretary, thanks for your time this morning. We'll let you go. And we appreciate it. Good. Thanks, Joe. OK.