President-elect Donald Trump’s pick to lead the Treasury Department, Scott Bessent, told lawmakers that he would protect U.S. farmers from any tariff retaliation by pushing China to live up to its purchasing commitments under the phase one deal.
“The Biden administration kept on all of the Trump tariffs, but what they did not do in the agreement with China was enforce the purchase provisions,” Bessent, a hedge fund manager, said during his confirmation hearing before the Senate Finance Committee hearing Thursday.
“If confirmed next week” Bessent added, “I will begin pushing for the purchase guarantees that were in the China agreement to be enforced.”
Bessent, who was responding to a question from Sen. Todd Young, R-Ind., said that he could also push for a “catch-up provision” whereby China would make additional purchases of U.S. agricultural products to make up for its under-purchasing in recent years.
In early 2020, the Trump administration and the Chinese government signed the phase one agreement that committed China to increasing purchases of certain U.S. products by $200 billion above 2017 levels over the next two years. The terms of the deal included purchases of an additional $80.1 billion of U.S. agriculture products.
After the two years, however, Beijing was still well short of its agriculture purchase commitments. China bought just $61.1 of U.S. agriculture products, or 83% of the target, according to an analysis from the Peterson Institute for International Economics.
Further, agriculture products were a rare bright spot of the deal. China’s total goods and services across the two years fell short of even the 2017 baseline level. So overall, Beijing bought none of the extra purchases under the deal.
President Joe Biden’s U.S. Trade Representative Katherine Tai made a general commitment to enforce the terms of the agreement in October 2022. But Republicans in Congress have repeatedly urged the Biden administration to do more to address China’s failure and enforce the purchase commitments.
Bessent, however, indicated this could be an area of focus under the next administration.
“The American farmers have been very loyal – 98% of rural voters voted for President Trump. So, they should know that their interests are his interests,” Bessent said.
An aide from Young’s office said the senator was satisfied with Bessent’s response.
Bessent owns up to $25 million of farmland in North Dakota that generates revenue from soybean and corn production, according to his financial disclosure forms. He emphasized his farming credentials during his Thursday hearing.
“Our family is involved in the soybean business,” Bessent said. “I may be the first Treasury nominee in a long time that knows what a section is – 642 acres.” A section is one square mile, or 640 acres.
The hearing also provided a glimpse into Bessent’s thinking on many of the incoming president’s economic priorities – including cutting the budget deficit, raising tariffs on U.S. imports and extending the 2017 tax cuts.
Bessent suggested that extending the 2017 tax cuts is “the single most important economic issue of today,” arguing that their expiration would be an “economic calamity.”
The nominee and Republicans on the Finance Committee sparred with Democrats over who would benefit from an extension of the 2017 tax cuts, with Bessent arguing that the middle- and working-class population would benefit from provisions like the increased Child Tax Credit.
If the cuts are allowed to expire, Bessent said, it would represent a “sudden stop” that falls hardest on working Americans.
Similarly, Democrats and Republicans disagreed over who would bear the brunt of Trump’s proposed tariffs. Trump, at various points, floated new 25% tariffs on Canada and Mexico, 10% tariffs on China, and an across-the-board tariff on all U.S. imports of between 10% and 20%.
Bessent suggested that the full effects of the tariffs would not be passed along to U.S. consumers, instead arguing that some of the tariff hike would be absorbed by a stronger U.S. currency and foreign manufacturers would also have to cut prices to remain competitive.
“That’s an academic view of it,” Finance Committee Ranking Member Ron Wyden, D-Ore., said. Wyden criticized Trump’s across-the-board tariff proposal, which the incoming president has suggested could be used to fund new tax cuts, for the costs it would impose on “working Americans and small businesses.”
“The history of this is it clobbers people on modest means,” he said.
Bessent expressed an eagerness to end some Biden-era initiatives, including its work with international partners on a global minimum tax rate, and adjust the Inflation Reduction Act’s 45Z Clean Fuel Production Credit.
Bessent said Sen. Roger Marshall, R-Kan., had briefed him on how Chinese companies stand to benefit from the 45Z incentives in its proposed format.
“That's obviously unacceptable,” Bessent said, adding that he looks forward to working with Marshall on the issue.
Bessent also seemed open to a proposal from Sen. Bill Cassidy, R-La., to introduce a “foreign pollution fee” that would levy a tax on carbon-intensive imports made with dirtier manufacturing processes than those used in the U.S. – including fertilizer.
Cassidy has previously suggested to Agri-Pulse that such an initiative could be used in a reconciliation package to offset new tax cuts.
“I think this is a very interesting idea,” Bessent said. “it could be part of an entire tariff program.”
While Bessent may have satisfied Republicans, at least some Democrats remain unconvinced. In concluding remarks, Wyden said he was concerned by some of the nominee's tax comments.
"We want a tax code to give everybody in America the chance to get ahead," Wyden said. "I continue to be very troubled."
