Treasury Secretary Scott Bessent said on May 18 that reciprocal tariffs could return to the levels set by President Donald Trump on April 2 if trading partners don’t negotiate in good faith.
On April 2, Trump announced a minimum 10 percent tariff on nearly all imports, with higher levies on roughly 60 nations labeled as the “worst offenders” in trade imbalances with the United States as part of an effort to close trade deficits.
He subsequently granted a 90-day pause to most countries to allow time for negotiations, while maintaining a baseline 10 percent tariff.
Speaking on NBC’s “Meet the Press,” Bessent said that the final tariff rate would depend on whether trading partners are willing to engage in good-faith negotiations on trade deals.
“Some countries were at 10 percent, some were substantially higher,” he said. “And the negotiating leverage that President Trump is talking about here is if you don’t want to negotiate, then it will spring back to the April 2 level.”
Those who fail to negotiate in good faith will receive a letter notifying them of the tariff they will face, Bessent said.
“This means that they’re not negotiating in good faith,” he added. “So I would expect that everyone would come and negotiate in good faith.”
His remarks followed Trump’s May 16 announcement that Bessent and Commerce Secretary Howard Lutnick will start sending letters in the coming weeks to trade partners outlining the tariffs that will be applied to their goods.
“I guess you could say they could appeal it, but for the most part, I think we’re going to be very fair,” Trump said during an event in the United Arab Emirates on May 16.
Trade Talks
Several nations, including India and South Korea, have engaged in trade talks with the United States in recent months to avert Trump’s tariff hikes before the pause ends.
Earlier this month, Trump announced that he had reached a trade agreement with the United Kingdom and that it would be a “great deal for both countries.”
“The deal includes billions of dollars of increased market access for American exports, especially in agriculture, dramatically increasing access for American beef, ethanol, and virtually all of the products produced by our great farmers,” he said at a press conference in the Oval Office on May 8.
Trump said the UK would be “fast-tracking American goods through their customs process” and that “there won’t be any red tape, things are going to move very quickly both ways.”
Under the deal, U.S. tariffs on British cars fall to 10 percent for the first 100,000 vehicles imported, and tariffs on steel are scrapped completely.
Trump announced last week that India has offered a zero-tariff trade deal with the United States, though no final decision has been made yet.
Indian External Affairs Minister S. Jaishankar has emphasized that any trade agreement with the United States must be “mutually beneficial” and serve the interests of both nations.
India has reduced duties on some U.S. products such as bourbon whiskey, motorcycles, information and communication technology products, and metals, while also enhancing market access for U.S. agricultural products and medical devices to secure a trade deal with the United States, according to a Feb. 13 joint statement.
On May 12, Trump reduced the tariff on Chinese imports to 30 percent after reaching an agreement with China to pause their trade measures. In turn, China’s rate will be cut by 115 percentage points to 10 percent, and Beijing will lift its countermeasures.
Prior to the agreement, China responded to U.S. tariffs on it with tariffs of its own, causing a back-and-forth that resulted in U.S. tariffs on Chinese imports topping out at 145 percent.
Moody's Downgrade
Additionally, Treasury Secretary Bessent said on May 18 that he is not worried about Moody’s recent downgrade of the United States’ Aaa credit rating to Aa1, and defended President Donald Trump’s tariffs and his sweeping tax cut bill.
Speaking on CNN’s “State of the Union with Jake Tapper” on May 18, Bessent said Trump’s bill, which would extend the 2017 tax cuts under the president’s first term, would surge a level of economic growth.
Bessent said that growing the economy faster is more important than “the potential growth of the debt.”
“So we’ve been trying to bring down the spending, and we are going to grow the revenue side. So we are going to grow the [gross domestic product] faster than the debt grows, and that will stabilize the debt-to-GDP [ratio],” he said.
Some Republican lawmakers are concerned that the bill does not do enough to address the growing debt. The United States currently owes $36.2 trillion.
The Committee for a Responsible Federal Budget projects that the current bill would add $3.3 trillion to the national debt, including interest, or “$5.2 trillion if its temporary provisions are made permanent.”
On May 16, Moody’s Ratings downgraded the United States’ long-term credit rating from Aaa to Aa1, citing sustained rising debt, growing interest payments, and a lack of political action to rein in chronic budget deficits.
“Successive US administrations and Congress have failed to agree on measures to reverse the trend of large annual fiscal deficits and growing interest costs,” it said in its May 16 statement.
Bessent said on May 18 that he does not “put much credence” in the Moody’s downgrade.
“[In] the history of rating agencies, by the time they get to a downgrade, everything’s already in the market,” he said.
“What I think is important is that President Trump has just come back from this historic Middle East trip, and there’s trillions of dollars coming into the U.S. So we are seeing confidence from investors.”
The move stripped the nation of its last perfect credit rating among the three major agencies.
