Join US Treasury Secretary Scott Bessent as he shares insights at WEF 2026 in Davos on innovation, economic opportunity, and navigating global economic challenges.
In Davos, US Treasury Secretary Scott Bessent framed President Trump’s agenda as a mix of hard security realism and pro-growth economics. On Greenland, he argued the issue is “Western hemispheric security,” calling Greenland “essential for the Golden Dome missile shield” and warning that without US control America could be drawn “ex post into a kinetic war.” He urged Europe not to overreact: “Sit back, take a deep breath. Do not retaliate,” while maintaining a trade deal with Europe remains on track despite a threatened 10% tariff tied to Denmark’s stance.
Bessent credited tariffs and fiscal tightening with deficit reduction, citing a drop in the deficit-to-GDP ratio from 6.9% to 5.4% and targeting 3% by term-end, while dismissing bond-market moves as driven mainly by Japan’s volatility. On China, he said rare earth flows are “in the 90s” for fulfillment and described using IEEPA tariffs as geopolitical leverage, including delaying China’s export controls.
Domestically, he highlighted deregulation, “full expensing,” and middle-class tax relief, forecasting up to “$1,000 per wage earner” in refunds. He defended state intervention in strategic sectors, insisting national security requires reshoring chips and critical minerals, with “18 to 24 months” to scale rare earth magnet capacity.
Secretary of.
Okay, I got it.
Good morning everyone. Thank you so much for joining us for this conversation with the Treasury Secretary of the United States, Scott Bessent.
Real good to be with you.
It's great to see you, Secretary. Thank you so much for sitting down with us. We so appreciate it. And there's so much to talk about. And we are going to be rolling on this live in about 20s on Fox. So we want to make sure that everyone knows that this is a live program. And we will be taking this as it is happening with the Secretary this morning. I know there's a lot of conversation this morning about President Trump's, considerations and thoughts about Greenland, and we will get into that, as well as the U.S. economy and the global economy as well. So, Secretary, there's so much to cover. Let me kick it off right now with just that, because I want to talk about trade and tariffs. It seems that the president certainly has set the tone. Before he even arrives tomorrow. So we'll get your thoughts on that as well as AI about the NATO alliance as well as the macro story. And I will also bring up something that you mentioned earlier, which is the Draghi report. The reason that I'm stalling here is because I wanted the programming to catch up with us so that we could begin live at 830. And in fact, we are beginning right now. Thank you so much, everyone, for joining us. I'm sitting now with the US Treasury secretary. Secretary, let me begin on trade and tariffs, because President Trump seemed to set the tone of conversation even before he has arrived by threatening tariffs on our European allies, until they support his plans to acquire Greenland. How do you justify taking over a country when in fact Denmark and Greenland have said they're not interested?
Well, Maria, I think the president has a very strong view on Western hemispheric security and believes that the US should not outsource our national security. He believes that Greenland is essential for the Golden Dome missile shield. And he also, you know, the president, as usual, it's the move after the move that as a as part of NATO, I think the president is worried that if there were an incursion into Greenland, the US would be called upon to defend Greenland. Greenland is becoming more and more attractive for foreign conquest. And he very strongly believes that it must be part of the United States to prevent a conflict, rather than getting the US engaged in ex post into a hot conflict.
So Greenland is not expected to be able to have the capacity to stop any potential missiles that could hit the United States. In other words, Greenland without US ownership makes the United States vulnerable. Is that is that the president's, main complaint?
Well, I think it's that and that the US there's the opportunity for the US to become embroiled ex-post into a kinetic war. If another country moved in on Greenland and no country is going to assert control. Greenland if the US controls Greenland.
Secretary, what do you want to say about the response here? I mean, the European Union is pushing back, saying we are not going to complete our trade deal with the United States because of this. They have already called an emergency summit for later on in the week about this Greenland situation.
Well, I would say exactly what I said after Liberation Day last April when the president imposed a tariff levels on the whole world. I tell everyone, sit back, take a deep breath. Do not retaliate. Do not retaliate. The president will be here, tomorrow, and he will get his message across. I believe he is going to have meetings and again, also have an open mind that you know, why why, why this rapid response in terms of, you know, this this is a no. And by the way, Maria, this has been the in the minds of American presidents for more than 150 years, for more, more than 150 years.
So the vulnerability was seen even back then.
Well, or the strategic value of Greenland. And I think as there are more, trade routes that move near Greenland, Greenland becomes more and more valuable.
Secretary, we're already seeing a reaction from markets. You've got, rates spiking in the United States up seven basis points on the ten year right now. You've got rates spiking in Japan. What do you want to say about this market reaction that we're seeing?
Well, Maria, I think it's very difficult to disaggregate the market reaction from what's going on endogenously in Japan. So Japan over the past two days has had a six standard deviation move in their bond market. That would be what has happened in the Japanese JGB. Tenure would be the equivalent of a 50 basis point move in US ten. So I think it's very difficult to disaggregate what the spillover from Japan is. I've been in touch with my economic counterparts in Japan, and I am, sure that they will begin saying the things that will calm the market down.
So what are the plans for tariffs on Europe then?
Well, we're we're in the midst of completing a, a very good trade deal for both sides. So, the plan is to go ahead with the trade deal. Of course, the president has said that he, on February 1st, will implement a 10% tariff. If, if the Danes do not want to, give up Greenland. And it is on the eight countries that sent troops to Greenland.
So what do you want to say about the NATO alliance, then? Denmark has been a long ally, the European Union united against any move. How do you progress with what looks like a strategic move for the United States, but also preserve the alliance, the NATO alliance?
Well, look, I think that the NATO alliance is very safe, sound. And thanks to President Trump, it's never been more secure. When President Trump came in, in his first term, the European countries and Canada were not meeting their, spending quotas as percent of GDP. Now they are they got a lot of catch up to do. And Maria, to put it in perspective, the United States of America since 1980 has contributed 22 trillion more dollars or spent 22 trillion more dollars on defense than all of NATO. So roughly the same size population. And we have spent 22 trillion more. That is two thirds of our outstanding government debt. The Europeans have been spending the money on social welfare, on roads, on education, and it's time for them to pay more, which they they've agreed to do.
Yeah, many of them have already stepped up like Poland.
Everyone has except Spain.
Okay. And do you not feel that a security deal in the Arctic would suffice in terms of Greenland?
Well, I think what we're we're seeing the, we're seeing, with, with a base that we have shared with the UK, for, for many years, the, the UK is signing the island over to Mauritius. So again, I can see why the president believes that for us engagement, we do not want another Diego Garcia on our, on our hands.
This is a very important point that you make. In terms of tariffs, how much money has been generated from tariffs already? Certainly the hysteria over President Trump's tariffs have died down since April of last year. What is the total run running rate right now?
Yeah, it's in the hundreds of millions of dollars Maria, the US for 20 for the fiscal year which ends September 30th, we had a fiscal contraction for the calendar year. We had a very large fiscal contraction. So we cut the deficit by about $200 billion. The important number is the deficit to GDP. So calendar year 2024 with 6.9%, the highest we've ever had. I mean we inherited a mess 6.9%, the highest we've ever had when the US was not at war or not in recession. So 6.9% calendar year 2025 5.4%. I have called for getting that number down to 3% by the end of President Trump's term, and I think we're on the way.
So you've been using that tariff money to to pay down the deficit.
Then it feeds into the general account. And it's been a big part of it. And again, last year, the US ten year bond was down about 40 basis points. I believe France was up about 40 or 50. Germany. Germany was up 50 or 60. US bond market had its best performing year since 2020. And again, back to your point that after Liberation Day, April, May, it's the end of the world. The world's going to sell us assets. Just the opposite happened is, as Treasury secretary, I can see who the buyers are of our bonds. And we had more foreign participation than ever.
And just to be clear, a moment ago, when I asked you about the market reaction, you don't think markets rates are spiking on this Greenland story? You think that what's happening in Japan is specific to Japan?
Well, I think that the Japan situation that the market there again had a six standard deviation move and that that was happening before any of the Greenland news. And I think the rest of the world German, German rates are up, French rates are up, Japanese rates are up a tremendous amount.
So I want to get to the macro story in a moment. But let me stay on tariffs for one more moment, because we could be hearing from the Supreme Court imminently. And of course, the Supreme Court will issue a ruling on the president's use of tariffs during a, quote, emergency. The Ieepa, reason that you've actually issued some of these tariffs, what are your expectations for the Supreme Court? We could hear from them this morning or tomorrow morning if they rule against you, what are the alternatives to raise that kind of revenue? Hundreds of billions of dollars that you've already been able to do.
Well, Maria, I think it's very unlikely that the Supreme Court is going to strike down a president's signature economic policy. It didn't early on with the ACA, also known as Obamacare. It the reinforced that recently. And the real the real problem here is President Trump has used iipa for negotiating leverage for geopolitics in emergency situations. If we look back, the first iipa tariffs were fentanyl tariffs. So on Mexico, on Canada, on China. And if fentanyl is not a national emergency, I don't know what what was 100, 200,000 Americans dying every year. And because of that, Mexico came to the table. Canada came to the table. China, who exports or the precursor drugs have all come to the table. And we're seeing a substantial drop. And protecting the American people. On October 8th, the Chinese government announced rare earth export controls on the entire world, not just the US, and which would have caused an industrial meltdown. President, threatened to 100% tariffs on China if they did this. My Chinese counterpart, who's been a very good the interlock interlocutor, had gone quiet for a couple of days. Chinese immediately came to the table and they rolled the export controls out a year. And President Trump insisted that I negotiate on behalf of the whole world. So in terms of the US leading, this is what US leadership looks like. He was able to use ieepa tariffs to negotiate for the entire industrial world. So I think it's very important here.
I'm glad you mentioned China. I'm going to come back to China. But while we're here, what is the latest timetable on, the much anticipated, bilateral trade deal with China?
It's the I had a meeting with my Chinese counterpart here in Davos last night. Vice Premier Hui Fung. He told me that just this week they have completed their soybean purchases. And, we're looking forward to next year's 25 million tons. I suggested maybe he would want to buy a little more, because President Trump always brings that up with party Chair XI when when they speak and they've done everything that they said they're going to do.
Are they having rare earth magnets flow or are they putting restrictions on that? Because there were reports last year that the Chinese were saying, we will send the rare earths, but we're not sending them to any companies that are tied to the defense sector and the US military.
They are flowing the as as expected. We are in a fulfillment rate that's in the 90s, which I think is quite satisfactory.
So so they didn't stop, even if it's a defense company, because I believe they tried to do that with Japan as well.
Well, Japan and China have gotten in a skirmish over some remarks that the Japanese prime minister made. So the US is immune from that.
Okay, let's talk macro. The US economy seems to have been doing much better than many expected. We had a 4.3% read in GDP last quarter. How would you assess the United States economy?
I think that it is a very strong and likely accelerating. And Maria, just to be clear, that 4.3% GDP, that was private sector GDP. So or actually after the fiscal contraction. So the real number was 4.7. The government contracted by 0.4. So that got us to 0.3. So that is pure private sector GDP. And President Trump's economic policy, tax deals, trade deals and deregulation, the deregulation, which I think is probably the most powerful part, is really just starting to kick in now. So so we have the tax deal, one big beautiful bill done on July 4th, which no one said could be done. And it contains the full expensing for US corporates on equipment, for factories, for ag structures. On the other side, for working Americans, the president's signature policies no tax and tips, no tax on overtime, no tax on Social Security, interest deductibility of auto loans if you buy an American car. So we're seeing this wonderful balance between, industrial America and mainstream America. I am also the IRS commissioner. And we did not change the withholding guidance. So we're going to see as commissioner, I can see there going to be very substantial tax refunds coming to working Americans in the first quarter. They'll change their withholding. They'll get a bump up in real incomes because of the expensing. We're seeing 1,214% CapEx growth in the US. And historically you have never seen a CapEx boom without seeing employment follow.
You've got a CapEx boom and a productivity boom as well. 4.7% is much better than so many people expected last year. Are you expecting the economy to at one point hit 5% as well?
Well, the Atlanta Fed GDP number, which is a very noisy number, is now reading 5.3. Because remember the fourth quarter GDP included included the Schumer shutdown. So some of that will be pushed into the first quarter. So I'm expecting that we could be well well over well north of three. And we'll have inflation coming down. As you said productivity is very high. And we have measured inflation and observed inflation. And with the observed inflation I think we can see that prices are already down and that will trickle into the CPI and the PCE which the fed looks at.
Well, it's a good point because there is still a perception that prices are still high.
Well, price prices are high. The the Biden administration was a wipe out for working Americans that the price level increased by 21, 22, 23%. But our friend Jason Trennert, the strategist, has something called the Common Man index. And that is what do working Americans buy? So, basket of groceries, insurance, rent, car payments. And that was up in the mid 30s. So very difficult other than with energy. The president through drill baby drill has gotten gasoline prices down. We're below $2 in many states. National averages below three. Even if you throw in the the outlier of California. And so that we can get down and we are working every day to get things down. And affordability is two pieces. Affordability is price level, but it's real incomes. Real incomes have gone up every month since President Trump took office. And as I said, I think we're going to see a big year for real incomes this year.
Wow. And you said in terms of the tax refunds, are we talking about thousands of dollars that people will be getting as a result?
We could see for working families for each, wage earner, we could see up to $1,000 per wage earner.
Okay. You said that prices are still coming down, but they're still elevated. The president announced many things, a litany of things just in the last 100 days. And I want you to walk through some of these things and tell us why they're important. Because he put a ban on large institutional investors, purchasing single family homes. He asked for $200 billion purchases of mortgage backed securities. And he put on a proposal for a 10% cap on credit card interest rates. We know credit card interest rates are soaring up 2,830% in some cases. That's going to cut into earnings in in of the bank. Certainly. And he also teased something about 401 KS that you would be able to tap into your 41K to then buy a home. Walk us through these things. Why are these so key, in your view, to growth and to reining in prices?
Well, here, why don't we start from the beginning?
So the first thing was the ban on large institutional investors purchasing single family homes and the purchase of mortgage backed securities.
Yeah. So the ban on institutional investors and single family homes, for those of you who are not American in the US pre great financial crisis. We didn't institutional investors did not participate in the single family market. So post the financial crisis, institutional investors hoovered up single family homes. They continue to do it. And there's a there's an unfair tax arbitrage there. The you and I have a mortgage. We can deduct the mortgage amount. Institutional investors can deduct the borrowing amount. But they can also, expense any repairs and depreciation. So, we think that it is a good idea to have them out of the market. We are going to give guidance at some point to see what is a mom and pop that some someone maybe your parents for their retirement about five, ten, 12 homes. So we don't want to push the mom and pops out. We just want to push everyone else out. And what's important here you will hear some misinformation that says, well, institutional investors are one, two, 3%. That is true. Having been in markets for 35 or 40 years, markets are made on the margin and institutional investors are much higher in boomtown markets like Charlotte, like Atlanta, like Huntsville, Alabama. So, they've done that in terms of having Fannie and Freddie, by. Ms.. The mortgages are two parts. It is the ten year bond yield, and it is the spread between mortgages and, the ten year yield. So the purpose of that is to narrow the spread.
Okay. The cap on credit card rates is expected to cut into bank earnings between 5 and 18%. Your reaction?
We've done a lot this year. Banks, bank stocks are at a new high. That through my position on Fsoc, the Financial Stability Oversight Council and the three bank regulators, the Federal Reserve, the OCC, the FDIC, we have done a lot to deregulate banks that are earnings are way up. More importantly, it has increased their lending capacity. Oliver Wyman's numbers, not mine, estimates that there's 2.5 trillion of extra lending capacity. The other thing that has been a focus of this administration and a focus of mine, is small and community banks, because what happened after the great financial crisis, all the regulations from Dodd-Frank, we had two big to fail. But then with small banks, you were too small to succeed. This regulatory morass. We have lost more than 50%, 50% of the small and community banks. And they they power small business lending, real estate lending and ag lending. So we are trying to bring that back.
Yeah, it's a great point because farmers really need the lending of these small community banks. Look, Secretary, I want to get your take overall on your thoughts on what you've done so far, because the president back last year, right after the inauguration, I sat down with the president and I asked him what he wants the economy to look like in four years. When he's done. And he was very clear, he said he wants private enterprise to rule the day. One year later, you've taken a 10% stake in Intel. You've taken a stake in MMP. Now, I know that these are national security issues. And the other day, the president told the defense contractors, don't pay dividends, don't buy back any of your stock. You need to be fulfilling what the country needs in terms of producing weapons. So what do you want to say to people who say, look, here is a so-called capitalist president and treasury secretary, and yet it's not private enterprise running things. The president is telling the defense contractors what to do, and you've taken stakes in these companies.
A couple of things, Maria. I think the only good thing that came from Covid was it was a test run for what would happen if our supply chains were ever broken due to a kinetic war. So we saw that there are five, six, seven key industries that we have to reshore. So everything you just said, rare earth magnets, we've got to get out from under China. China's grasp the semiconductors. I would say that the single biggest threat to the world economy, the single biggest point of single failure, is that 97% of the high end chips are made in Taiwan. If that island were blockaded, that capacity were destroyed. It would be an economic apocalypse. So we are reshoring the semiconductor industry, the to the US with the defense contractors. The defense contractors are no different than the systemically important banks. They exist. The systemically important banks exist because of the backstop from the fed, because the of the regulations. And these defense contractors have let down the American people. They have let down the American people. They are five, six, seven years behind on fulfillment of their contracts. And they exist because of the US Department of War. So I do not think it is unreasonable to tell them that until further notice, you need to build more factories and buy back less stock. And by the way, Maria, these CEOs making 30, $50 million a year for failing the American people. So I don't see any discrepancy there. And as you said, everything on your list, everything on your list is national defense. And so once they once they get to some normalized level of backlog, I don't know whether it's two years, three years, then we can talk about removing those restrictions.
So what you're saying is you want private enterprise to lead the day. But when it comes to national security, the government will be a shareholder.
And again, a lot of this isn't private. You know, we have seen what happens when the free markets get, kind of perverted because what happens with critical minerals that several companies have tried to stand up critical minerals facilities in the US and the Chinese come lower price undercut them, and then they're bankrupt. So, we have to we are going to put in a system price, floor, price ceilings. And when you talk about multilateralism and the US leading, I just hosted at Treasury last Monday that G7 plus plus. So G7 plus Australia plus India plus Mexico plus South Korea. And we are working at warp speed to create a critical minerals block where we can mine, process and refine critical minerals. And China won't have this sword over our heads.
So how long do you think it will be until the United States is, in fact, independent in terms of the refinement of these minerals, independent in terms of oil, etc.? I mean, I know that the US could be the is the largest producer anyway, but but do you expect this year, next year, what's your timetable in terms of the US not relying on China for these things?
Well, obviously for energy we are independent. We're the an energy superpower. And I would say 18 to 24 months. I went down about two months ago to my home state of South Carolina and in South Carolina, for the first time in 25 years. There's producer there who made rare earth magnets. So they are starting to come off, that the, supply chain, they believe that within two years they can fulfill most of the rare earth magnet needs for the US. And then we also want to help our allies because the supply chain is important.
What do you want to say about sanctions? Something else you've been working on? Of course. What are you planning there in terms of Iran and the impact there? Do sanctions actually work? And the same question with regard to 500% secondary sanctions or tariffs on countries who purchase energy products from Russia?
Okay, so two things there. There are Treasury sanctions. And if you look at a speech that I gave at the Economic Club of New York last March, I said that I believe the Iranian currency was on the verge of collapse, that if I were an Iranian citizen, I would take my money out. President Trump ordered Treasury and our OFAC Division, Office of Foreign Assets Control, to put maximum pressure on Iran. And it's worked because in December their economy collapsed. We saw a major bank go under. The central bank has started to print money. There is a dollar shortage. They are not able to get imports. And this is why the people took to the street. So this is economic statecraft. No shots fired. And things are moving in a very positive way here. Now on the 500% tariffs on the buyers of Russian oil, that is a proposal that that Senator Graham has in front of the Senate. And we will see whether that passes. We don't believe that President Trump needs that authority, that he can do it under Ieepa. But the Senate wants to give him that authority. And just just to be clear, that we have Europe buying Russian oil still still for four years later. They are financing the war against themselves. India started buying Russian oil after the conflict began, but President Trump put a 25% tariff on them. And India has geared down and has stopped buying Russian oil. And then three, China is a very large buyer of Russian oil, as they are of Iranian oil as they were of Venezuelan oil. But guess what, Maria? No more Venezuelan oil for them.
So would you treat China the same as the others in terms of buying Russian oil with with regard to tariffs and sanctions?
Well, we'll see what happens with this Senate bill and the with the with the Iranian oil. That will be up to President Trump.
Secretary, what do you want to say about artificial intelligence and the idea that AI efficiencies will likely kill jobs? A lot of people are worried about jobs. Do we have a plan in the U.S. government right now in terms of job creation, in the face of AI efficiency killing jobs?
Well, Maria, we are seeing the record factory groundbreakings. That's why President Trump wants to bring back these precision jobs to to the U.S. and historically, every productivity boom has led to job growth. Now, will can there be some toing and froing in terms of people changing, changing professions? I can't remember what the number is. Maybe you know it. 50, 60% of the professions today didn't exist 30 years ago.
So it's a big number. It's technology.
It's a big number, but it's something we're very cognizant of. We haven't seen it in the numbers yet. I think that it could be very different than what we saw with the China shock or the China shock was a blue collar phenomenon. My guess is the AI shock might be a white collar phenomenon. We'll see.
Secretary, as we wrap up here a moment ago, you said, look, you've been dealing with markets for a long time, your entire career. What do you think of markets today? I mean, the market has been rallying on the president's policy. Today. Of course, we're seeing a sell off. But do you think the markets are getting it right in terms of rallying on the president's policies? Going into this Davos meeting?
Well.
I try not to to the extent I had success in the markets, it was not making short term predictions. But I can tell you what has been very heartening for me. I don't have time to follow the markets as closely. But to the extent last year, year before, everyone said, oh, this is just mag seven seven stocks, it's not healthy. We've seen a big broadening out in the market. The Russell index, the smaller cap stocks has outperformed the S&P equal weight has outperformed. And I actually think that that speaks to the economic recovery. We're seeing it across all sectors. Our friend Ed Hyman at ISI does these corporate surveys. Corporate surveys are the highest they've been since June 22nd. And I think you're starting to see it in all sectors of the market. And the market follows the economy. And again, I just think that we have the best place in the world. Come build your factory. You have tax certainty, you have regulatory certainty, and you have energy, certainty.
And of course, deregulation. And that was one point that I wanted to make before we wrap up here, that Mario Draghi wrote a report two years ago about regulation in Europe and the fact that the largest market cap company in Europe is Novo Nordisk, because of ozempic about $400 billion or so. And we just saw Nvidia in the United States hit $5 trillion.
Well, clearly, Maria, the innovation, the the change and the ability to adapt is in the US. The US is the innovation capital of the world. I don't think anything's going to change that. I was just asked in another meeting by some business leaders, what advice would you give to Europe? And I said I would operationalize the Draghi report because the EU was supposed to cut down on red tape, but it is logarithmically increased it. When I talk to tech executives, they will tell me it is easier doing business in China than the EU. Wow. That's not that's not a great stat. I had a European businessman come to see me the other day. He said, Secretary Besson, it took me three days to get an appointment with the white House and with you. It took me 90 days to get an appointment with Ursula von der Leyen. And we are one of the largest employers in Europe. So there's just a different mindset here. And I think the mindset has got to change. It's got to change to a growth mentality. And that's President Trump's invitation is we are growing, we are deregulating and come and join us. The US is going to host the G20 meeting next year. And on the finance track we are going we have identified the greatest financial risk as a lack of growth because post-Covid, the every government balance sheet has the ballooned and we have this gigantic government debt. There are two ways you can either cut your way out of it through austerity. No voter wants that, or you can grow your way out of it. So we are inviting the world come, grow with us, prosper with us, and we can all do it together.
Secretary, thank you very much. U.S. Treasury Secretary Scott Bassett. Thank you.
So much. Thanks, Maria.