Scott Bessent and his team at the Treasury Department now face what could be their biggest challenge yet — fixing the affordability crisis as he shapes President Trump’s policies on tariffs, taxes, and Uncle Sam’s $38 trillion debt pile.
The months ahead of the US midterm elections will be pivotal, as the former hedge-fund manager looks to power the US economy to two consecutive quarters of growth while tackling the spiraling cost of living for everything from groceries to cars.
The 63-year-old Bessent has stated that stiff levies on imports are aimed at bringing back domestic manufacturing, rather than a tax on consumers. He and the president have also touted leverage to open up foreign markets to US goods.
Yet a recent Bank of America report, written by its senior US economist Aditya Bhave, insisted there was “no debate” that “tariffs have pushed consumer prices higher.”
Experts warn that the policy could lead to signs of stagflation, when higher consumer prices further squeeze households already pinched by elevated costs, strangling economic growth.
“Heading into 2026, we see a US economy that is increasingly on track for a stagflation lite scenario,” economists at Canadian lender RBC wrote on Wednesday.
“Tariffs will weigh on the labor market and put upward pressure on inflation,” they added. “Our concern remains that we have yet to see the full pass-through of tariffs to consumer goods prices.”
Bessent has pushed back, arguing that tariffs will disappear over time like “a shrinking ice cube” as US production ramps up and that they are a necessary move to challenge China’s heavily subsidized industries.
Data released on Friday showed that consumer spending increased moderately in September after three straight months of solid gains, suggesting a loss of momentum in the economy.
“Middle and lower-income households remain worried about their prospects, as underscored by weak consumer confidence and anxiety over job security,” said James Knighley, chief international economist for the Americas at ING Bank.
The Key Square founder will also have to tame persistent fiscal deficits, fueled in part by Trump’s tax cuts. Accordingly, Bessent and his inner circle will face difficult tradeoffs, potentially utilizing tariff revenues or implementing deep spending cuts to curb government borrowing needs.
Bessent’s ability to deliver tangible economic wins could determine the party’s fate, with the Republican Party holding wafer-thin majorities in Congress.
Trump himself is due in Pennsylvania on Tuesday for a set-piece speech to reassure Americans who are still feeling the squeeze, the Associated Press reported on Friday, quoting White House officials.
The president has until now largely blamed his predecessor, Joe Biden, for leaving him to inherit an inflation-ravaged economy and a high debt pile.
The White House has been vocal in calling on Fed Reserve chair Jerome Powell to cut rates faster as a way of fueling long-term growth — even as top Wall Street CEOs such as Jamie Dimon have urged that the central bank remain independent.
