US Treasury Secretary Bessant reveals tariff and tax reduction strategy: Market turbulence is just a temporary detox period, other countries need not panic.

As the United States is set to implement the new "Base Tariff and Reciprocal Tariff" system on April 9, Treasury Secretary Scott Bessant stated in an interview this morning on April 4 how the U.S. government uses tariffs as a bargaining chip while simultaneously advancing the congressional tax reduction plan and fiscal restructuring. Bessant emphasized that other countries should not be nervous and should not take retaliatory measures; if they are willing to negotiate, the U.S. is open to discussions. He also revealed that negotiations with China have not yet begun, but issues concerning TikTok, the renminbi, and fentanyl may be on the negotiation table.

The new tariff system will come into effect on April 9. Bessant emphasized not to be nervous, as this is the standard upper limit.

Bessant pointed out that the United States will first impose a 10% base tariff and then implement different levels of reciprocal tariffs based on the situation of each country. He emphasized, "As long as you do not take retaliatory measures, this is the highest standard and will not be higher." At the same time, he urged countries not to be anxious and not to rush to retaliate.

Tariffs are a negotiation tool, but the negotiations are decided by Trump.

When asked whether the EU, China, India, and others have started negotiations with the United States, Bessant responded that there is currently contact, but whether to negotiate and how to negotiate ultimately depends on Trump. He pointed out that the White House is currently inclined to let the market calm down for a while and is not in a hurry to negotiate.

China may face tariffs exceeding 50%, with fentanyl becoming a new focal point.

Regarding China, Bessant admitted that assuming the current tax rates, currency manipulation, and fentanyl exports, the overall tariffs the U.S. could impose on China might exceed 50%. He also refuted China's claim that "the fentanyl tariffs must be lifted first to resolve the drug crisis," stating: "The number of American lives lost daily due to fentanyl continues to rise, and we cannot let China set conditions."

TikTok and the Renminbi may also be on the negotiating table.

When asked whether TikTok and the renminbi could be used as bargaining chips, Bessant said: "Currently we have not started bilateral negotiations, but everything could potentially make it to the negotiating table. Tariffs are a precursor, and we will subsequently enter the phase of restructuring trade relations between the US and China."

Bessant stated that the stock market decline is unrelated to tariffs, this is the government's detoxification period.

In response to the market reaction, Bessant calmly stated: "This stock market drop is not due to tariffs, but rather the government has been handing out money for years, and now we are entering a fiscal detox period." He emphasized that "public spending should decrease while the private sector should increase," and pointed out that 10,000 manufacturing job opportunities were created just last month.

Tax reform does not tax tips, does not tax social security, and buying American cars can still be tax-deductible.

Bessant revealed that the current tax reform bill is progressing quite smoothly and has gained consensus from both the House and Senate, with procedures expected to be initiated as early as this weekend. The main content includes:

tips are tax-exempt

Social Security Fund Tax Exempt

The interest on purchasing a "Made in America" car can be tax-deductible.

This tax reform will be handled through the budget reconciliation mechanism (Reconciliation), implemented together with expenditure reduction policies.

The budget reform relies on tariffs, combined with efforts to combat waste.

There are concerns that tax cuts and subsidies may widen the fiscal deficit, to which Bessant responded: "We rely on two avenues: first is tariff revenue, and second is the government's internal anti-corruption and spending reduction measures."

He also admitted that these revenues and savings cannot currently be included in the Congressional Budget Office (CBO) estimates, but the actual financial situation will be reflected in future financial reports.

Inflation, confidence and corporate signals, Bessant says he hasn't seen a real crisis yet

Regarding the rising expectations of inflation and declining consumer confidence, Bessant believes this is an emotional issue, not a substantive one. He pointed out: "If American households were truly panicking, they would have already gone on a buying spree and demanded higher wages, but none of this has happened yet."

Regarding international issues, attention is about to be focused on sanctions against Ukraine and Iran.

Bessant predicts that after the implementation of tariffs and tax reforms, the Ministry of Finance will shift its focus to foreign economic affairs:

Ukraine Agreement: A "four-page parameters understanding agreement" is expected to be completed within two weeks to accelerate peace and reconstruction negotiations.

Escalation of sanctions against Iran: For the first time, sanctions have been imposed on a private refinery in China conducting import transactions in Iran, and this may expand in the future.

( Note: Four-page parameters of understanding, a preliminary consensus document before political negotiations, does not equal a formal contract, but rather outlines the initial framework of what direction both parties agree to discuss and what the basic principles are. )

In this article, U.S. Treasury Secretary Bessant reveals the layout of tariffs and tax cuts: market fluctuations are just a temporary detox period, and other countries should not be nervous. Originally appeared in Chain News ABMedia.