Most analysts believe that the policy proposed by Trump, such as increasing tariffs, reducing taxes, and decreasing immigration, could reignite inflation. However, hedge fund manager Scott Bessent thinks this statement is ridiculous.
Although the support for Trump from all sectors of society is getting louder, 'Trump 2.0' has also caused a lot of concerns, of which reigniting inflation is one of them. However, hedge fund manager Scott Bessent thinks this statement is ridiculous, and he defended the Republican presidential candidate's economic policy.
Most analysts believe that the policies proposed by Trump, such as increasing tariffs, reducing taxes, and decreasing immigration, could reignite inflation. A survey of economists by the media earlier this month found that 56% of respondents believed that if Trump were re-elected, the inflation rate would be higher than that during Biden's tenure, 16% held the opposite view, and the rest of the economists believed there was no difference.
Michael Metcalfe, head of macro strategy at Fundamentals Global Markets, warned: 'The risk of inflation is greater in Trump's second term than in his first term.'
But Bessent said in a recent interview, 'I think it's ridiculous. We saw what happened with Trump 1.0. The inflation rate was 1.9%. '
According to a report by the Committee to Unleash Prosperity, an organization that advocates reducing government spending and easing regulations, the annual average change in the consumer price index during Trump's term was 1.9%. The report cited data from the Bureau of Labor Statistics.
The following chart clearly shows the inflation changes during the presidencies of Obama, Trump, and Biden.
Bessent further explained that any new tariffs from Trump 'will obviously be phased in'. He made the remarks during the Republican National Convention in Milwaukee. Trump confirmed on Tuesday that he plans to raise tariffs on the European Union after taking office.
'This is assuming that all tariffs are fully implemented on the first day, but obviously they will be phased in. Relaxing regulations will lead to lower inflation, and lower energy prices will lead to lower inflation, and I believe that under Trump's leadership, the budget deficit will decrease, not increase.' He added.
It is worth mentioning that Bessent is one of the popular candidates for the Treasury Secretary of Trump 2.0. He graduated from Yale University. In 1991, he joined Soros Fund Management Company, and he also experienced the famous British pound crisis in 1992 and was Soros's 'love'.
Bessent left Soros in 2015 and founded the macro hedge fund Key Square, which initially received $2 billion in funding from Soros.
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