Bessent shares MAJOR announcement on Russian sanctions

Here's a detailed summary of the YouTube video transcript:

Key Concepts

• Export Controls on China: Potential U.S. measures targeting Chinese imports of software, laptops, and jet engines.
• Rare Earth Magnets: A critical component in various technologies, subject to Chinese export controls.
• U.S.-China Trade Relations: Ongoing discussions and potential escalations between the two economic powers.
• Russia Sanctions: New, substantial sanctions being announced against Russia, potentially impacting oil purchases.
• Secondary Sanctions: Measures targeting third-party entities that engage in specific transactions with sanctioned countries (e.g., purchasing Russian oil).
• China's Gold Purchases and Treasury Bond Sales: Observations on China's financial strategies and their potential implications for the U.S. dollar.
• U.S. Dollar Strength: The policy and economic factors contributing to the dollar's value as a reserve currency.
• U.S. Economic Outlook: Positive projections for the U.S. economy, driven by tax cuts and controlled inflation.
• Budget Deficit Reduction: Strategies and progress in lowering the U.S. budget deficit.

U.S. Export Controls and China Relations

Treasury Secretary Scott Bessent discussed the ongoing tensions with China, particularly concerning potential U.S. export controls on items like software, laptops, and jet engines. These measures are being considered as a response to China's recently announced "wide-ranging export controls on rare earth magnets." Bessent characterized China's proposed licensing regime for rare earths as "unworkable and unacceptable," emphasizing that this is a "China versus the globe" issue, not solely impacting the U.S. He expressed hope that these issues could be resolved before President Trump's meeting with Chinese Vice Premier, aiming for a more positive dialogue. Bessent stated that "all options are on the table" regarding the U.S. response if negotiations for a pause or relief on China's regime are unsuccessful. He noted that this would be part of discussions between President Trump and President Xi, and that the U.S. has had "successful de-escalation" in previous meetings.

Upcoming Diplomatic Engagements

Bessent outlined his upcoming travel itinerary. He was departing for Asia, with Jamison Greer already en route to Malaysia. Bessent himself was scheduled to meet with Chinese counterparts on Saturday and Sunday. He also mentioned traveling with the President to Japan to meet the new Prime Minister, who is a protégé of a former Prime Minister with whom President Trump had a close relationship. Following Japan, the President was scheduled to attend the AIPAC conference in Korea, where a "pull-aside" meeting with President Xi was planned.

Sanctions on Russia

The discussion shifted to potential sanctions on Russia. Bessent indicated that President Trump is focused on resolving remaining global conflicts, including the one between Russia and Ukraine. He expressed disappointment that President Putin had not engaged in talks "in an honest and forthright manner," referencing President Trump's past decision to walk away from talks in Alaska when progress was not being made. Bessent announced that "either this evening or first thing tomorrow morning, we are going to be announcing a substantial increase in Russia sanctions." He described these as "one of the largest sanctions we have done this or Western Federation." When questioned about whether these sanctions would target the sale of Russian oil or involve secondary sanctions on businesses dealing with Russia, Bessent stated that the sanctions would be "substantial and powerful" and that "classic Canada and Australia" were being encouraged to join. He also mentioned encouraging NATO countries to participate in the sanctions package, with calls being made to discuss it with them.

China's Financial Strategies and the U.S. Dollar

The conversation touched upon China's practice of selling U.S. Treasury bonds and buying gold. Bessent acknowledged that the Chinese central bank has been increasing its gold reserves, a trend also seen in many emerging market countries. He noted that while the U.S. holds the largest gold reserves globally, he could not definitively speak to China's motivations. However, he asserted that U.S. Treasury options have "never been so solid" and that there has been "record foreign purchases" and "very, very good foreign interest" in U.S. debt. Regarding the value of the U.S. dollar, Bessent reiterated that a "strong dollar policy" doesn't mean avoiding short-term fluctuations. He defined it as practicing policies that maintain the dollar's strength as a reserve currency. He observed that the dollar was weak in 2017, bottoming out at the end of President Trump's first year, coinciding with the passage of the tax bill. He also noted a dollar bottom around July 4th of the current year.

U.S. Economic Performance and Outlook

Bessent expressed optimism about the U.S. economy, describing it as looking "great" and projecting 2026 and 2027 to be "great years." He highlighted the impact of the tax bill, including promises kept such as no tax on tips, overtime, or Social Security, and the deductibility of auto loans for American cars. He noted that working Americans have kept their withholding the same, leading to substantial tax refunds and real income increases in the first quarter. Bessent, also serving as IRS Commissioner, stated that he could see the impact of these changes. He attributed the current economic strength to "stopping the Biden inflation," pointing to decreased energy prices and expecting housing prices to follow. He anticipates the CPI number to decline in the coming months.

Budget Deficit and Fiscal Policy

Regarding the budget deficit, Bessent stated that contrary to some expectations, the deficit was lower in the last fiscal year than the previous one. He drew an analogy to weight loss, suggesting that controlling the budget deficit requires "spending less or control spending and grow more." He expressed hope that by keeping spending flat to down and achieving nominal growth of at least 5%, the deficit as a percentage of GDP could be in the "low fives," down from 6.4-6.5%. He emphasized that this progress is being made "when we're not in recession and we're not at war."

Conclusion

Treasury Secretary Scott Bessent provided insights into critical U.S. economic and foreign policy initiatives. He detailed the U.S. stance on potential export controls against China in response to rare earth restrictions, highlighting the unworkable nature of China's proposed regime. Bessent also announced significant new sanctions against Russia, aimed at resolving the conflict with Ukraine. He addressed China's financial maneuvers, asserting the continued strength and foreign interest in U.S. Treasury securities, and reaffirmed the U.S. commitment to a strong dollar policy. Domestically, Bessent painted a positive picture of the U.S. economy, driven by tax cuts, controlled inflation, and a declining budget deficit, projecting strong economic performance in the coming years.