Treasury Sec. Scott Bessent: Mayor Mamdani is Leading Democrats 6/24/26

0:00Bring in show music, please. Hi, I'm CNBC producer Katie Kramer. Today on Squawk Pod, Treasury Secretary Scott Bessent, a robust conversation that starts with tariffs. We have rebooted the tariff program right now. We have something called Section 122 tariffs, which is a 10 percent global tariff. And covers the New York City political primaries. Last night we saw Mayor Mondani is the leader of the Democratic Party and the establishment Democrats. Finally, we are seeing where the Democrats are going in this election. Plus America's role in writing the rules of the road for AI. I think we have the obligation to do it because we're the leader.

0:43We are the AI superpower. China's next. And France is a distant third. Plus the rest of today's news that got us squawking, oil prices, the newest Dow component and... Do you remember the share from the rifleman? No. I don't even remember the rifleman. It is Wednesday, June 24th. Squawk Pod begins right now. Stand Becky by in 3, 2, 1, cue it please. Good morning, everyone. Welcome to Squawk Box right here on CNBC. We are live from the Nasdaq market site in Times Square. I'm Becky Quick, along with Joe Kernan. Andrew is out today. Take a look at crude prices, which we, it's one of the first things we look at in the morning.

1:25And we're 72 now, almost 71. President Trump putting energy companies on notice earlier this morning in a post on True Social. President wrote that the big oil companies aren't dropping the price at the pump, commensurate with the sharply lower prices they're paying for oil. And those prices are dropping like rock. In other words, customers are being gouged. I've instructed the DOJ to immediately start looking into this. Gasoline prices better start going down a lot faster than what I'm seeing. President DJT, of course, you know, there's refining and crack spreads. Takes some time to work through.

2:00But the crazy thing is that a lot of them are different companies than the majors, than the producers. But the national average ticked higher. That's probably pretty frustrating. You want to see that come down. Although it's below four. Anyway, AAA says the gallon of gas averaging$3.93 today across the United States, unless you're lucky enough to live in California. That's down from$4.52 just a month ago. And actually this morning, I don't know if we can look at diesel prices this morning. Diesel this morning fell below$5 a gallon for the first time since the war kicked off. So I think you can watch that pretty closely, too.

2:33We should say the Dow Jones Industrial Average is getting a new member. S &P Global says that Google's parent Alphabet will replace Verizon in the index ahead of trading next Monday. Alphabet will join mega cap tech peers NVIDIA, Amazon, Apple and Microsoft in the Dow. Its share price of about$350 will make it among the five or six most impactful stocks in the index. That stock right now,$347.85. It is up by about half a percent this morning. Honeywell International will remain in the Dow under its new name, Honeywell Technologies. That comes after a spinoff of Honeywell Aerospace. The spinoff firm will not be in the Dow.

3:12That's not long for this world. For the world of the Dow, you mean? Yeah, the world of the Dow. Is that the lead story? Verizon is still a Dow component? Well, actually, I was a little surprised. I was thinking Google's not. Yeah. I was thinking. That's the converse of, yeah, okay, that makes sense. But I think, you know, I've already been calculating my own personal Dow without Verizon and with. Kind of the way Philippe Lafon thinks about. Yeah, kind of the way. Yeah, that's my index of the future. You're thinking about next year, not 10 years. He's coming in again for another half hour. You would do that, wouldn't you?

3:48Yeah, I would take him in a heartbeat. We had more to ask him yesterday before he left. I talked to him after. I go, you had to get just inundated. He said he's never had. That much. Yeah. Well, the big, the high level stuff that he was talking about. Really, I sat and thought about it through the day. There were a lot of things that, a lot of food for thought, just the way that he thinks about things, thinking of the index of the future. When's going to be the first, you know, 10 trillion. I don't know if anyone, I don't know, you know, knowing him and sort of being friends and seeing what he's done.

4:22These are things I wanted to know. How does, you know, not, OK, what's the profit margin that you're, are they going to rise or fall with Samsung or something? I want to know, how did you do this? You know, you're still a young guy. He's younger than his actual age. No, he looks younger than his actual age. But we were talking about this yesterday. And to be that accomplished and be that wise, you have to have some years. Yeah. That doesn't come. Right, but to start in 99 with, you know, a very small beginning, even though he had a good start. I like the story about how he couldn't get hired at Apple, so he just went fishing.

5:02That's a good story for a lot of people. For a lot of kids who are looking for jobs right now. And then his parents cut him off and said, you've got to go get a job. Got to be. So he went out. Then I realized he's got to be the most successful person that ever came from McKinsey. I mean, I can give you 10. You know what a consultant is. It's a guy from out of town who doesn't have a job. Yeah. It comes into your... People like to tell you, you don't have a job. I can go... Other CEOs... I guess Gerstner actually was good. Yeah, yeah, he's McKinsey. But then I can give you a long list of McKinsey just that should not have been CEOs.

5:39We don't have to mention any of you. You know some. Your next congressmember, Brad Lander. Give it up one more time for the mayor of New York City. Three progressive political candidates endorsed by New York City Mayor Zoram Amdani winning Democratic primaries for House seats. Oh, good. Two incumbents who represent parts of Manhattan, Brooklyn and the Bronx were defeated. Separately, New York Assemblyman Micah Lasher beat fellow state lawmaker Alex Boris in a primary race for longtime U.S. Representative Jerry Nadler's seat in Congress. President John F. Kennedy's grandson, Jake Schlossberg, also lost in that race.

6:21Two political action committees affiliated with major AI companies had pumped$20 million into that contest, either backing or opposing Boris. Yeah. We focused on that earlier this week. Was that just yesterday? It must have been when we were with Almanac. I mean, the people, I took a good look at the, for me it was like, you know, bad or worse. That were the choices in a lot of those. And they went with worse. We actually went with worse. I did hear some political commentary this morning. I don't know about we, not we, they. It did hear some political commentary this morning about whether you can take things away from that.

6:56Is this just New York City or is this something where you can really do nationwide? Do they win the generals? They could win the generals here, but nationwide, I don't know about that. And that's the question. Does the Democratic Party need to push further left or does it need to step away from that if it wants to win on a national? And it's Mika Brzezinski. Mika. But Mika like the sheriff on the rifleman. I was thinking Mika like the stone. Remember the sheriff on the rifleman? No. I don't even remember the rifleman. Chuck Connors, Seton Hall, baseball, basketball, the greatest. He was like Clint before Clint.

7:31But Clint was on at the same time in Rawhide. Treasury Secretary Scott. That I know. Roll it, roll it, roll it. Yeah. Get him up. Get him up. Treasury Secretary Scott Besson says the U.S. will be a more demanding partner when it comes to trade relationships. There's a Wall Street Journal op-ed which echoed his speech, I think, at the New York Economic Club. Besson said other countries should expect a nation that is now more aware of its interests and more prepared to protect them. The piece was adapted, as I said, from a speech that the Treasury Secretary gave last night at the Economic Club of New York.

8:08Besson spelling out core principles for his department. Those include making sure that the U.S. is more self-sufficient, make things here in AI and critical minerals, and committed to the use of power to fight back against discrimination aimed at U.S. firms. It's almost like the Trump doctrine, these five features that is spelled out. Because Scott, I don't think, would want to call it, even though Hamilton was a Treasury Secretary, I still don't think Scott would say these are mine. He said they were. His and the President. He said he actually referred back to Alexander Hamilton. Oh, yeah, I know.

8:40But but but I still think it's it's he wouldn't say this is the best doctor. And he'd say this is the president's any any repeatedly said that last night. I was at the dinner last night where he laid this out. It was a celebration of the 200th anniversary of the country. And his his point was that we have realized that there are threats that we are just waking up to. And we need to be more careful about how we use America's power and its economy, its economic power to make sure that we are cutting fair deals, that those deals then benefit the average American. I think he did bring it back to that.

9:18But but starting with the OK, there's the world that our founders looked at and they had certain principles and guiding challenges and concerns that totally changed. And in the post-war period where, you know, we were trying to rebuild the rest of the world, we were this shining light in the world. And people, we were ready to let people sort of, I don't know, what do you call it when you're in a race in the car in front of you? You get behind it. We were letting people not take advantage of us, but we're draft office. But there comes a time where, you know, it's you can't be taken advantage of when in all this globalization, cheaper prices, you know, it works for a little while to help the countries.

10:07But eventually it comes back in globalization. You saw it hollowed out the entire. Well, and he said the only good thing about the pandemic, he said this before, he said the only good thing about the pandemic, it showed us our weaknesses where we have allowed our supply chains to be weakened to the point that it is a national defense concern on some issues. And some of those areas you laid out, like semiconductors, like pharmaceuticals, those are the areas that the. You heard all of it last night. And I know you've got, you know, you've got a lot going on, but he will be here. I can't believe I can't be here.

10:40Well, you heard everything. I heard everything last night. I got to talk to him last night. And there were some interesting. Brett Baer was there and interviewed him afterwards. And there were some really interesting things that came out of that where he talked about Kevin Warsh. Yeah. What he thinks about what the Fed is likely to do under under Warsh. He talked about the private credit, which, you know, he's a big fan of private credit. But he laid out that private credit will disappear in times of hardship and you cannot use it. if there is a downturn in the economy, you can't use it, but you can the small banks and community banks.

11:14And he thinks, you know, one thing that people haven't focused on, he's very focused on small banks and community banks remaining really strong for that reason. If there is a downturn and a pullback in credit, those small banks, you can motivate by opening the window, by doing different things. You can't do that with private banks. You asked whenever you were interviewing Buffett for people to write in questions, but won't you, you're not going to be here, but give Give me some questions for the Treasury. What I would like to ask him, he talks about, and the dollar has been rallying, talks about how important that is.

11:47Well, one of the reasons it's rallying is the notion that Kevin Warsh is big on dollar stability, which is the side of the mandate that I think is less important, at least in certain times for the president. He wants full employment, obviously, but he wants full employment more maybe than, And then he likes lower interest rates, which could mean, you know, dollar devaluation. Okay, a couple of questions that I didn't hear answered last week. You write them down, so don't tell them now. Write them down, and I'm going to ask them. AI is a really big one. I'm going to take credit for him. Okay, okay.

12:20I've got three good questions that I didn't hear answered. Write them down. I'll refer to this. But I am very disappointed not to be here, but it's great that he's going to be here in studio with you. I even came out. I have to leave to catch a flight. I'm going to call him quick takes. Yes. Oh, good. Yeah. I like that. I like that. I was thinking. And I would not leave under other conditions, but I have to get to. I know it, and it's got to do with. It has been in the Institute because Priscilla Chan, and this is for CNBC Cures. Right. And I'm going to be speaking with her, meeting with her tonight and speaking with her tomorrow.

12:48Right. So I wouldn't leave for any other reason. But CNBC Cures. All right. Well, I'm going to be just the two looking across. My question, I'm going to ask him when he comes in if he wants me to wear a jacket. I brought one. You should. Really? Yeah. I'm going to ask him. I might have him take off his jacket. Good luck with that. I think you should put yours on. We'll see. Cheese will be next. Coming up on Squawk Pod, an extended interview with Treasury Secretary Scott Fessent. Artificial intelligence, the Federal Reserve, and of course, tariffs. People like to say that it's added to inflation, but when you look at the data, the structural inflation has been in services.

13:28And if all goes according to the administration's plan. The tariff rates are going to go back to exactly where they were. That conversation is up next.

13:41Welcome back to Squawk Pod from CNBC. Here's Joe Kernan. Stand by Joe. Here's Mike. Thank you. Joining us now, Treasury Secretary Scott Besant in studio. Glad to have you here, sir. Joe, good to be with you this morning. Quite a speech last night. And I don't know whether you have help or whether it's all you, but I thought it was very eloquent in building on some things that I think you've touched on in other settings. I think in Dallas you talked about it, maybe at the Reagan Library. But I think as we are celebrating this 250 years of the greatest nation on earth, we need to, I think, reflect on how we continue to do what our founders wanted to do in a totally different world with different challenges.

14:32And I think your words were the disciplined use of America's economic power in service of our sovereignty. And I think that I think that I'm going to remember that I'm going to put that to memory because I think it's very statesmanlike. Well, Joe, it's the again. Thank you for having me. It's exactly what President Trump is implementing in this historic second term. And as we have the 250th this year, it's a good idea to reflect. and President Trump has reawakened and made us all aware and our allies and our enemies that the U.S. has both military might but we have economic might and for a long time our economic might was not only was it challenged it was taken for granted and it was abused and now we are saying that for our allies come along with us here are the rules of the road we want reciprocity and engaging and saying, like, it is a new system, but old values, I think is perfectly appropriate.

15:41And, you know, President Trump has set the stage for this. When we look at what happened in Iran, that you think about it, we had maximum pressure. Then we had epic fury. Then we had economic fury. And then we had the blockade. And that's how we got the Iranians to the negotiating table. In just looking over your remarks, what I was struck by, and I think we can, since we have time, we can make the case that times are different in terms of post-war United States, where we almost could afford to be taken advantage of by the rest of the world because we were so dominant. But things changed, and those old habits turned into things that actually hurt our country, hollowed out the core, and we're still dealing with that now.

16:33Well, it was in our interest to rebuild our allies, to defend against communism in the post-World War II era. And I think that our interest strayed from our economic policies. Our economic policies strayed from our interest over the past couple of decades. And President Trump has just called for a rethink. And we have all hands on deck in the administration, whether it is our foreign policy, our economic policy, our military policy. And everyone wants to be part of the U.S. economy. We're the world's largest consumer. We're the world's great innovator. And I'm responsible with our dialogue with China.

17:17And I try to put myself in my Chinese counterpart's seat. And when they look at the United States, what do they revere in the United States? First of all, our great military. We've seen that in the past year. Our economy and the strength of the dollar, that our energy independence and our energy dominance, and our innovation. No one has innovation like this. I got a question last night. It's also the 250th anniversary of Adam Smith's The Wealth of Nations. and Adam Smith couldn't have imagined what the United States would have unleashed by letting people innovate, form their own businesses and live in a free society.

18:04When you unleash human potential like only the United States has, look what we've done. We should be proud of this in our 250th year. I wonder what it would cost to make a couple of thousand copies of that and pass it around in New York City. Did you see the results of those elections last night? Well, you know who predicted this early on was I was in the Oval Office meeting with President Trump when the mayor came in to see him. And he said, you're the leader of the Democratic Party now. And that was months ago. And I wouldn't have believed it. But after last night, I won. Last night we saw the Mayor Mondani is the leader of the Democratic Party and the establishment Democrats.

18:43Finally, we are seeing where the Democrats are going in this election, and it will be a very stark choice between Republican parties. And it's not the fringe Democratic left anymore. It's the mainstream of the Democratic Party. What do you think happens? I mean, these people probably win in New York, for all I know. I'm from New Jersey. But can you take this message national? We'll see. Seems to be playing in Maine. seems to be playing in Michigan, seems to be. So again, if this is the way the Democratic Party wants to go, and it seems to be, more power to them because we are going to offer a stark contrast.

19:26Do you want to keep more of your money? Do you want to have the state takeover? And what we can't get is an answer. Where has this ever worked before, Joe? that, you know, as we see the regimes collapsing in Venezuela, the regimes collapsing in Cuba. Where does this ever work? I can't get an example. I'm an economic historian. You divided, I guess, what you think the way to approach things are into five categories that you went over last night. I think given the background that we just talked about with how we have been taken advantage of, in your view and in the president's view, I think these first two things, national capacity, obviously we need to make things here.

20:13And then the second is reciprocity. And both of those play into the whole idea of tariffs. And I don't know if Hamilton would have been in favor of tariffs. No, no, no. Hamilton was the earliest tariff ban. He was in favor of tariffs for several reasons. He wanted to protect the nascent industry of the United States of America as we built capacity to compete, especially with the Brits. And he also wanted to fund the Treasury. So Alexander Hamilton was the original tariff man. But I guess what year do you think it became just such a terrible word? Look, I'm not sure when it did. There were great tariff fights during the McKinley era.

20:54but the tariffs had worked very well and then the income tax came in at a very low level and then the income tax just kept getting ratcheted up. We had an income tax in the United States right after the Civil War and it was to pay down the United States debt, but we paid down the debt and then the income tax went away, came back right after World War I. Okay, so tariffs at this point obviously have, in your view, have been de minimis in adding to the structural inflation that we have or worth it? Or how would you characterize it? Look, the data, people like to say that it's added to inflation.

21:37But when you look at the data, the structural inflation has been in services and you don't import the services. And what we've seen is in many of the goods, the prices have been paid by the producers. We saw many of the Chinese producers, some of the Chinese low-end clothing companies, reduce their prices by more than 50%. Yeah. And at this point, the method to use because of what happened with the Supreme Court? Yeah, well, that was unfortunate. The president used IEPO, which was a very efficient way to put on tariffs. We have rebooted the tariff program right now. We have something called Section 122 tariffs, which is a 10 % global tariff.

22:27Currently, USTR Ambassador Jameson Greer is doing studies for Section 301s. And if those studies are successful, and I have no reason to believe they won't be, but we don't know until they are, then the tariff rates are going to go back to exactly where they were. I would say the good thing about having used IEPA in 2025, it allowed us very quickly to get to tariff deals or trade deals that we never would have gotten to before. The EU is going to pay us 15 percent and they are going to charge us zero. So we have had a big, they are rebalancing there. So, and they're bringing down their non-tariff trade barriers, many of their unfair financing practices, and it's the same around the world, whether it's Japan, Korea, our allies, you know, whether it's China.

23:22So, I think it's been a big success at Treasury. Assuming that the 301 studies go through, we think that there's going to be a de minimis decline in tariff revenue in our projections for fiscal calendar year 2026. We should feel comfortable dictating a lot of trade rules as the United States. Your third principle is that America is going to write the rules of the next economy. So we're going to write the rules on trade. We're going to write the rules on AI. Do we have the right to do that? I think that you feel that we do and the president feels that we do. We don't want red communist China writing the rules, I know.

24:06Well, I think we have the obligation to do it because we're the leader. We are the leader. I was just accompanied the president to the G7 meeting, and it was the U.S. tech companies who are by far in the lead. Still at this point, no doubt. Oh, no doubt. China knows that. And the nature of AI and the recursive learning of the models that once you get in the lead, then the models, they start working to train themselves. And it's very difficult for anyone to catch you if you keep up that path. But I think what's important here is we can't let other countries bog us down with regulations. You know, we're seeing that globally.

24:52U.S. is an energy superpower. And then other countries are trying to use extraterritorial measures to say, oh, you have to get your net gas this way. You've got to have a methane cap or something like that. And we can't do that in AI. And we're not going to do it. We are the AI superpower. China's next. And France is a distant third. Yeah, we shouldn't be shy about forcing our will on the way things are done. Well, or setting the global standards. Just as we set global standards in many, many industries, and it's the standards. When you look back at the cell phone industry and mobile data, it's very important that we use our standards, 3G, 4G, 5G, 6G, because the country that sets the standards then has the advantage.

25:47So for 60, we want to work with our allies and form a Western alliance. And again, the U.S. wants to lead, but we want to bring other countries along. I guess maybe this is one of the most important. The fourth principle that you outlined is financial leadership in terms of currency, I think, in terms of the dollar. And people haven't seen, perhaps, the rebound in the dollar in recent months. It's kind of it's gone unnoticed because the demise was greatly exaggerated. I think we have a chart where we can we can look at that. It might not be for all the right reasons, higher interest rates, etc.

26:27But but dollar dominance is essential. Well, dollar dominance is essential in everything President Trump is doing here. If you look, the the new Venezuela is going to is invoicing in dollars. They're coming back onto the dollar system. They've been sanctioned. They were not allowed to translate or to transact in dollars. And now the dollar is going to be the centerpiece of their trade. They were selling discounted oil to China and not getting dollars. We're seeing in the Iranian negotiations, the Iranians will be invoicing in dollars. So everything we are doing is pushing the dollar back. it's never left as the centerpiece for the global currency system but we're reinforcing it you know I would anticipate when the Russia Ukraine conflict ends that Russia will want to come back in the dollar system because again you know that the dollar it's our liquidity it's our capital markets it's the depth and breadth everyone wants to be here and I think many times the The great thing about the United States is we course correct when we go too far one way or the other.