Scott Bessent, the U.S. Treasury Secretary, dismissed concerns over the U.S. government debt and the inflationary impact of tariffs on companies such as Walmart Inc. (NYSE:WMT).
What Happened: Following Moody’s Ratings downgrade of the U.S. credit rating on Friday, Bessent referred to Moody’s as a “lagging indicator.” He attributed the current fiscal state to the Biden administration’s spending over the past four years, which the Trump administration inherited.
Regarding the potential price increase by Walmart due to higher import taxes, Bessent disclosed a conversation with Walmart CEO Doug McMillon. The retailer plans to absorb some of the tariffs, as it has done in previous years. Bessent emphasized that he did not exert any pressure on Walmart, reports Bloomberg.
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Bessent also discussed the Federal Reserve’s “wait-and-see mode” concerning the potential inflationary effect of tariffs. He mentioned a mechanism for continuing talks with China following a recent tariff truce. However, he warned that other countries might face unilateral tariff rates if they fail to negotiate in good faith.
On the topic of Russia sanctions, Bessent refrained from making predictions but reiterated President Trump’s readiness to increase sanctions if Russian President Vladimir Putin does not negotiate in good faith.
Addressing criticism over a potential acceptance of a 747 jet from Qatar, Bessent called it a distraction from a successful Mideast trip. He concluded by downplaying the significance of Moody’s downgrade, stating that Middle Eastern countries investing in the U.S. are not concerned about it.
Why It Matters: The U.S. Treasury Secretary’s dismissal of Moody’s downgrade and his comments on tariffs’ impact on companies like Walmart are significant.
They reflect the government’s stance on fiscal health and international trade negotiations. Bessent’s comments also shed light on the administration’s approach to managing potential inflationary effects of tariffs and its readiness to increase sanctions if necessary.
His remarks on the Moody’s downgrade indicate a confidence in the U.S. economy that may influence investor sentiment.
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Image: Shutterstock/Maxim Elramsisy
