Besant's Interview with NBC News
"Everyone Must Negotiate in Good Faith"
On Moody's U.S. Downgrade: "A Lagging Action"
Scott Besant, the U.S. Treasury Secretary, warned on May 18 (local time) that countries that do not engage sincerely in trade negotiations with the United States will once again face higher tariffs. Regarding the recent surprise downgrade of the U.S. sovereign credit rating by Moody's, one of the world's three major credit rating agencies, he stated that it was a "lagging action" resulting from the fiscal spending expansion under former President Joe Biden's administration.
In an interview with NBC News that day, Secretary Besant commented on President Trump's 'tariff letter' remarks, saying, "It means that if other countries do not negotiate in good faith, they will receive a letter stating 'this is the tariff rate,'" and added, "I expect everyone to negotiate in good faith."
During his recent Middle East tour, President Trump said in the United Arab Emirates (UAE) on May 16 that "within the next two to three weeks, Scott (Treasury Secretary Besant) and Howard (Commerce Secretary Rutnick) will send letters to other countries informing them of what they will have to bear to do business in the United States."
Secretary Besant stated that countries that do not negotiate in good faith will once again face the country-specific reciprocal tariff rates that President Trump announced on April 2, which had been postponed in effect. He explained, "This is the negotiating leverage President Trump is talking about," and added, "If you do not want to negotiate, tariffs will go back up to the April 2 level."
Secretary Besant said he is focusing on trade negotiations with 18 major countries, and indicated that for countries with smaller trade volumes, tariff rates will be set on a regional basis. In the case of South Korea, bilateral negotiations with the United States are already underway.
In a CNN interview that day, when asked how many countries he expects to announce trade agreements with, he replied, "That depends on whether countries negotiate in good faith," adding, "What we are focusing on right now is 18 important trading relationships." He continued, "And there are many smaller trading relationships where we can just present (tariff) numbers," and added, "My sense is that we will do a lot of regional negotiations. For example, this could be the Central America regional tariff rate, and this could be the tariff rate for this part of Africa."
Regarding Moody's surprise downgrade of the U.S. sovereign credit rating, Secretary Besant said, "I think Moody's action is a lagging indicator," and argued that this move is related to the spending policies of the former Biden administration, such as responding to climate change and expanding healthcare coverage. He also stated, "I do not trust Moody's that much."
He also outlined plans to address the debt issue by reducing government spending and promoting economic growth. He said the government debt-to-GDP ratio is "the most important figure," and added, "We will grow GDP faster than the rate of debt increase, and then the debt-to-GDP ratio will stabilize."
Previously, on May 16, Moody's downgraded the U.S. sovereign credit rating from the highest level, 'Aaa', to 'Aa1'.
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