Treasury Secretary Scott Bessent said the economy is on a strong footing to face the Trump administration's new tariff regime, adding that the administration has a number of negotiations with foreign governments planned in the coming weeks.
"There is a little uncertainty, but in general, the companies I've spoken to, people who have come, the CEOs who have come into Treasury, tell me that the economy is very solid. We got very good jobs numbers last Friday, so I think that we are in pretty good shape," Bessent said at the American Bankers Association Washington Summit on Wednesday morning. "I think we have about 70 negotiations lined up, I'm not planning on going anywhere for Easter."
The March 2025
Bessent singled out China as the primary offender in the global trade system, noting that it was the only country that had escalated tensions. However, the European Union proposed additional duties of 25% on a range of U.S. imports in response to the U.S. metals tariffs on Monday. Canada has also started imposing a 25% tariff on certain vehicle imports from the U.S. as of Wednesday.
Read more of American Banker's
Despite the turmoil, Bessent expressed optimism that the U.S. could negotiate ideal tariff levels with its military allies — though, as he put it, not always "perfect" economic allies — and then jointly confront China as a unified bloc. He clarified that the tariff levels announced were a ceiling — not a floor — and would remain capped on nations which do not retaliate.
"I think what a lot of people are missing here is that the levels that were put out last Wednesday are a ceiling … if you don't retaliate, but [only] if you don't retaliate," he said. "At the end of the day, we can probably reach the ideal [levels] with our allies, with the other countries that have been long-term military allies — [if] not perfect economic allies — and then we can approach China as a group."
Bessent also touched on capital regulation at banks, criticizing the Biden administration's Basel III endgame capital
"To the extent that the endgame standards can provide inspiration, we could borrow selectively from them," said Bessent. "But this should only be done to the extent that we can independently validate the underlying rationale and then make that rationale available for public comment."
He flagged competitive parity as a key challenge, warning that lowering capital requirements for certain assets — like mortgage loans — only for the large banks subject to the rule, would entrench their dominance. One fix, he suggested, would be to let smaller banks opt in voluntarily to the modernized standards.
"Modernizing regulatory capital likely would mean reduced capital requirements for mortgage loans and some other exposures that are core to the community bank model, giving only large banks the benefit of the reduced requirements for those exposures as actually contemplated under the Biden administration would have entrenched their already dominant position," he said. "One possible solution would be to give each bank that is not mandatorily subject to the modernized requirements the option in its discretion to opt in."
Bessent also said regulators plan to revise how stress capital buffers are calculated for large banks, with a focus on bank industry input. He raised concerns that the current framework — especially its reliance on stress testing — can make leverage capital restrictions unnecessarily binding.
He also called for a wider reevaluation of the liquidity framework, aiming to better balance its costs and benefits. That review, he says, will examine how loans and other productive assets can be more broadly used as collateral during stress periods and reassess the role of the discount window and Federal Home Loan banks in liquidity planning. Bessent also questioned whether regulators place too much emphasis on reserves as liquidity buffers.
"Our assessment will also consider whether examiners have developed a bias for reserves over other liquidity sources," he said. "And how we can better ensure that liquidity buffers are indeed buffers, not regulatory minimums that banks can draw down during a period of stress."
Bessent also warned that excessive compliance burdens are undermining the core work of community banks. He said the Treasury will push for more tailored regulations that better fit the community bank model, including possible categorical exemptions from certain rules.
"There may be strong cases for categorical exemptions of community banks from some entire regulations," Bessent said. "In particular, we'll be taking a close look at the CFPB recent rules and the bank regulators expectations related to internal controls. This will include, for example, third-party risk management and information security."
He called for supervision to refocus on material financial risk, saying this could be the most helpful for smaller firms. Bessent said that the Biden administration's "unduly centered" focus on governance and management issues — which he called distractions from core risks — contributed to oversight failures during the 2023 bank collapses.
"[These focuses] can distract examiners and banks' risk managers from the real risk to safety and soundness," Bessent said. "The association's mission drift can lend itself to political ends, as we saw with the focus on climate and the debanking of disfavored individuals and industries."
Bessent laid out a set of regulatory issues Treasury plans to tackle, including a push to reform anti-money-laundering rules and countering the financing of terrorism.
"We will advocate for changes to the AML-CFT framework to truly focus on national security facilities in higher risk areas and explicitly permit financial institutions to de-prioritize lower risk," Bessent said.
Bessent also said regulators should define "unsafe and unsound" by a formal rule using more objective measures rooted in financial risk. On deposit insurance, he said the Treasury will explore changes with Congress, including raising coverage limits for business payment accounts.
In response to the
