Last Sunday morning, U.S. Treasury Secretary Scott Bessent traveled to Florida to meet with Donald Trump, who was busy with golf tournaments. Since taking office on January 20, the president has spent every weekend except one at his Mar-a-Lago residence. Advisors, government officials, businessmen, and politicians from around the world have to travel there to scrape a few minutes of his time. Bessent had been there many times, but after a chaotic week marked by the "day of liberation" on Wednesday, April 2, and the steep market declines in the following two sessions, he stayed behind to work. Fed up with the chaos and lack of coordination, seeing how each of Trump's economic advisors improvised with often contradictory explanations on tariffs in newspapers and on TV, he had had enough.
Bessent boarded his plane, spent the day in Florida, and returned with the president on Air Force 1. His message was very clear: the need to unify the discourse. With the markets very nervous, articulating a different argument every day was not viable, stating that there would be no negotiations one day and that negotiations were ongoing the next. Unlike the 'believers,' people like the 'tariff czar' Pete Navarro, the main ideologue of protectionism, Bessent believed and believes that limited tariffs, perhaps with some exemptions for critical sectors, could be beneficial. However, as a market-made millionaire, a protégé of George Soros no less, he understood better than anyone the risks of losing control.
Trump was not entirely convinced. He understood part of the argument, but what prevails in his vision are "instincts," and he saw no reason to back down due to a stock market drop. Until bonds took the place of stocks. On Monday, while Bessent explained that he had been chosen to lead negotiations with Japan, telling investors that everything was part of a plan to find solutions without falling into a global recession, Navarro published an opinion article in the Financial Times, taking a firm stance against tariff flexibility and once again declaring that there would be no bargaining. "This is not a negotiation," he said. In line with the president, boasting that everything was going well.
The administration's standoff with the markets lasted only a few more hours, as it took the 10-year bond yield to start rising by half a point, driven by sales from its major holders (Japan, China, the EU, the partners now being attacked, challenged, and scorned). On Tuesday at midnight, Washington time, yields began to rise vertically, one of those things that set off alarms and woke up government officials, businesses, and banks. In the morning, three of the top economic advisors, Bessent, Commerce Secretary Howard Lutnick, and advisor Kevin Hassett, sat down with Trump in the Oval Office to show him the situation with debt market charts in hand.
Shortly after, Trump capitulated. He presented it as a great victory but admitted that the reason was the risk premium. "Well, I thought people were getting carried away. They were getting nervous, a little overexcited, a little scared," he told reporters later. "I was watching the bond market, which is very complex [full of nuances]. If you look at it now, it's beautiful, but people were a little dizzy," he added, explaining how he had reacted based on "instincts" and how he would continue to do so in the future, for example, when deciding whether to grant exemptions to struggling companies.
The events of the last 72 hours not only reflect how the president operates, a compulsive consumer of TV news who on Wednesday watched the interview of JP Morgan CEO Jamie Dimon on Fox Business, where Dimon assumed that a recession was a "likely outcome." But also how Wall Street actors reach him (Dimon knew he would hear his words) and the philosophical divisions within his team. Trump has had a very clear idea for 50 years about the American economy and tariffs. In his first term, he was surrounded by people who did not share the absolutist worldview, but now he is surrounded mostly by believers or ballers who do not contradict him, no matter what he says.
Bessent, the Treasury Secretary, is a unique figure who stayed on after advising the campaign and proposing a 3-3-3 plan: 3% growth, a 3% deficit, increasing oil production by 3 million barrels a day. Gay, a former Democrat, wealthy, with decades of experience in investment funds, pragmatic, perhaps the one who knows the markets best. He has never publicly corrected the leader, even if it means defending things he does not believe in or trying to convince the American public that every step and correction is part of a master plan. He believes that the U.S. can leverage its position and advantage to change the international order but without breaking it. He supports tariffs but not an all-out war with the world and has been reported to prefer being the president of the Federal Reserve and is concerned about his reputation with the recent market fluctuations. He advocated and advocates using tariff threats as a way to bring dozens of countries to the table to renegotiate trade barriers. But without nonsense if investors panic. In a similar vein are Elon Musk, always independent, and Kevin Hassett, head of the Council of Economic Advisers, in favor of tax cuts and close to the historical core of the Republican Party, having advised Mitt Romney, George W. Bush, and John McCain in the past.
On the opposite side of the board is Navarro, an Economics Ph.D. from Harvard, a tariff fanatic, the biggest hawk with China, the guru who has polished the president's ideas against Beijing and the EU the most. Navarro, who last year went to jail for refusing to testify in an investigation into the Capitol Riot and who supported Trump to the end, maintaining that he did not lose the 2020 election, wholeheartedly believes that the entire world must be squeezed, which will bring wealth and prosperity to America. Therefore, there is nothing to negotiate, and anything that stands in the way is un-American. He was the one Elon Musk defined this week as "dumber than a bag of bricks," recalling how he invented economists in his books to bolster his ideas.
In the Tariff Team camp, there are two more categories. On one side, the absolute loyalists, willing to sacrifice themselves and go to war. Figures like Stephen Miller stand out there, not an economist but with a huge influence in the administration as deputy chief of staff and a loyal devotee. Ready to do anything for the president, from separating immigrant children from their parents to attacking judges. And the sycophants, like Commerce Secretary Howard Lutnick or Trade Representative Jamieson Greer, whose bewildered expression on Wednesday when he learned of Trump's 180-degree turn via social media while defending the administration's previous stance before Congress perfectly sums up not only the level of improvisation in the White House but also the lack of cooperation and coordination.
Litigator and former chief of staff to Robert E. Lighthizer, Trump's trade representative in his first term, Greer played a key role in negotiations with China, Mexico, and Canada between 2017 and 2020. These economists are willing to say what the president wants to hear, tasked with devising mathematical formulas, no matter how ridiculous, to implement punitive trade measures. They are the ones who have to build the theoretical framework to develop the boss's primal instinct.
Lutnick became wealthy leading Cantor Fitzgerald, a financial services company specializing in Treasury bonds, and has been the most questioned in recent months, even accused of profiting from what is happening in the markets. The press has published all kinds of stories about his poor relationships with others, especially Bessent (who 'stole' the position he aspired to), and he is always at the top of the list for potential dismissal.
The last category is formed by more academic economists like Stephen Miran, another Ph.D. in Economics from Harvard, former Treasury official, and hedge fund strategist. He is one of those who has built the intellectual defense of the frontal attack on partners and the market, developing a plan for revolution, what he calls possible Mar-a-Lago Agreements to force former European and Asian allies to submit. To accept raising their currencies and even exchanging their 100-year U.S. Treasury bonds for others at 100 years. A toll to the imperial authorities in exchange for the privilege of trading with Washington, military protection, and the structure created around the dollar.
Trump likes his advisors to discuss and fight, even to attack mercilessly as Musk and Navarro did. To compete for his attention and favor. And to compete to see who defends more strongly, in the media or before businessmen, the genius of the supreme leader. Something in which they have all excelled in the first three months.