Scott Bessent says tariff rates will return to ‘reciprocal’ levels if countries don’t reach trade deals with US

By Auzinea Bacon, CNN

(CNN) — Tariff rates will soon return to a “reciprocal” level if countries don’t reach trade agreements during the 90-day pause, Treasury Secretary Scott Bessent said Sunday.

“President Trump has put them on notice that if you do not negotiate in good faith, you will ratchet back up to your April 2 level,” Bessent said on CNN’s “State of the Union with Jake Tapper.”

There are 18 “important” trading partners that the United States is most focused on solidifying deals with, Bessent said. He did not say how quickly tariff rates could revert to “reciprocal” rates.

“There are a lot of smaller trading relationships that we can just come up with a number. My other sense is that we will do a lot of regional deals — ‘this is the rate for Central America, this is the rate for this part of Africa,’” Bessent added.

President Donald Trump announced a slate of “reciprocal” tariffs on April 2, which he called “Liberation Day.” He later paused those levies for 90 days, which lowered rates to a baseline rate of 10%.

On Friday, Trump said that time is running out for countries to make a trade deal with the United States.

“We have, at the same time, 150 countries that want to make a deal, but you’re not able to see that many countries,” Trump said during a business roundtable in Abu Dhabi. “So at a certain point, over the next two to three weeks, I think (Bessent) and (Commerce Secretary Howard Lutnick) will be sending letters out, essentially telling people — we’ll be very fair — but we’ll be telling people what they’ll be paying to do business in the United States.”

Markets soared on Monday after Bessent and US Trade Representative Jamieson Greer outlined a temporary de-escalation of a trade war with China in Geneva, Switzerland, with the United States lowering tariffs on Chinese imports from 145% to 30%, and China lowering duties on US goods from 125% to 10%. The S&P 500 last week surged 5.3% with five consecutive sessions of gains.

Tariffs put pressure on businesses, consumers

Bessent was also asked about the whiplash and uncertainty caused by Trump’s tariffs. He responded that the administration’s negotiating tactic is “strategic uncertainty.”

“If we were to give too much certainty to the other countries, then they would play us in the negotiations. I am confident that at the end of these negotiations, both the retailers, the American people and the American workers will be better off,” Bessent said.

When asked about the impact tariffs will have on small businesses that rely on products made in China, Bessent responded that he thinks the United States “will continue trading with China in the kinds of products that these small businesses are talking about at lower tariff levels.”

Many American small businesses face serious risks, as costs have skyrocketed and growth plans are uncertain due to fluctuating tariff rates.

Companies pass on tariff costs to customers by raising prices to avoid narrowing margins, a notion the Trump administration has repeatedly disputed.

Retail giant Walmart is among the most recent American companies that warned of price increases. On Saturday, Trump told the company in a post to Truth Social to “eat the tariffs.”

Bessent said he spoke directly with Walmart CEO Doug McMillon on Saturday.

“Walmart will be absorbing some of the tariffs, some may get passed on to consumers,” Bessent said.

The US loses its last perfect credit rating

Moody’s Ratings on Friday downgraded the United States’ debt, which held an outstanding rating of AAA. Moody’s dropped the US debt rating to Aa1, joining the two other major credit rating agencies Fitch Ratings and S&P, which lowered ratings for US debt in 2023 and 2011, respectively.

Bessent told CNN on Sunday that he “does not put much credence in the Moody’s” downgrade.

The downgrade could lead more investors to believe lending money to the government is more risky, potentially causing US Treasury yields to rise. The US Treasuries, particularly the 10-year US Treasury, influence various debt, including mortgage rates for American homes and contracts written around the world.

This story has been updated from its original version.

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CNN’s David Goldman, Betsy Klein, Elisabeth Buchwald and Tami Luhby contributed to this report.