Treasury chief hints at tariff rollback if US production rebounds

US Treasury Secretary Scott Bessent signaled a potential rollback of reciprocal tariffs imposed under the Trump administration, stating they are likely to shrink as trade imbalances are corrected.

“Over time, the tariffs should be a melting ice cube,” Bessent said in an interview with Nikkei. The comments came the same day the US raised tariffs on imports from Japan, increasing rates from 10% to 15%.

The tariff hikes are part of a broader trade strategy aimed at correcting the $1.18 trillion US current account deficit. “If production comes back to the US, then we'll be importing less. So, we'll rebalance,” Bessent explained.

According to a Yale University estimate, the US now has an average applied tariff rate of 18.6%, the highest since World War II.

Trade talks with China, which Bessent called “difficult,” remain a top priority. “It's a non-market economy, and non-market economies have different goals,” he said. “We think that a lot of the production is below cost. It's a jobs program. They have employment goals. They have production goals, more than profitability goals.”

The administration is also leveraging tariffs for foreign policy, including pressure on India over Russian oil imports. “Just like now, he said he wants India to stop buying Russian oil,” Bessent noted.

A deal with Japan includes a $550 billion investment and loan pledge, while the US maintains a $69 billion goods trade deficit with Tokyo. Bessent called the agreement a “golden industrial partnership.”

On the delayed execution of reduced tariffs on Japanese cars, Bessent said, “The UK agreement took about 50 days… could be more, could be less.”

Looking ahead to the Federal Reserve leadership, Bessent emphasized the importance of monetary independence and forward-thinking leadership. “The Fed is independent,” he said, while noting concerns about mission creep.

Regarding the dollar, Bessent defined strength not by price but policy. “The strong dollar policy is to have policies that continue to keep the US dollar the reserve currency,” he said.

By Vafa Guliyeva