The Supreme Court has ruled that former President Donald Trump has some immunity from criminal charges related to his attempts to reverse the results of the 2020 election. As the 2024 election draws near, Key Square Group LP Founder, CEO, and CIO Scott Bessent joins Catalysts to discuss what a second Trump term would look like.

Bessent — a Trump supporter and former CIO of Soros Fund Management — explains that one of Trump's biggest economic policies is tariffs, which Wall Street believes are bad for the economy as it would stoke inflation.

"I think they were wrong in Trump 1.0. I think they'll be wrong in Trump 2.0," Bessent says. He adds, " My inclination is that when we hear 60% tariffs on China, that's the beginning of a maximalist negotiating position. That's the way President Trump negotiates. I would be surprised if we ever hit that. But I think given his record in Trump, 1.0, he has a lot of credibility in using tariffs to negotiate."

While some argue that Trump's agenda on immigration would also be inflationary as it would raise labor costs, Bessent states, "the 8 million job openings are not the people who are pouring across the border every day. They're not going into jobs at Microsoft (MSFT) and senior management. So I think that that's not right."

Bessent is in consideration for the position of Treasury Secretary if Trump gets reelected. He explains that despite disagreeing with Federal Reserve Chair Jerome Powell's strategy to curb inflation, he would not fire him: "I think Jerome Powell has done an extremely poor job, but I don't think it's to anybody's advantage to fire him. I think that his term will run out. I think that he will be replaced." He notes that both President Biden and former President Trump want to see lower interest rates.

For more expert insight and the latest market action, click here to watch this full episode of Catalysts.

This post was written by Melanie Riehl

Video Transcript

The Supreme Court ruling.

Former President Trump does have some immunity from criminal charges related to those attempts to reverse the 2020 election results here with more.

We've got Scott Bess and Key Square Group LP founder and CEO, as well as the former Cio of Soros Fund management.

He is also a Trump supporter.

Thank you so much for being here with us.

Just talk to me really quickly about your initial reaction to this news.

Yeah, look, I I try to stay mostly in my finance lane and you know, II I think we see um that the Democrats welfare strategy hasn't been a great strategy thus far.

You know, if it were an investment strategy, I I think it, it would have been pulled because, you know, every time President Trump's been indicted, his popularity goes up since the verdict on May 30th through June 15th, there was a record amount of fundraising.

I think the Trump campaign raised $400 million.

How does this impact fundraising?

Do you think from institutional investors?

From Wall Street?

From CEOS?

Yeah.

Look, I think this probably doesn't have, have much of an effect.

I think we can get on with the election and we can see the, you know, who, who's the best candidate.

Well, let's talk about the election and the policies at play here.

One of the big policies from former president Trump, of course, is tariffs.

The consensus view from some of the biggest banks on Wall Street is that the policies Trump is backing would be bad for the economy would be inflationary at a minimum.

How do you justify tariffs as an investor yourself?

Well, look, I, I think that they were wrong uh in Trump 1.0 I think they'll be wrong in Trump 2.0.

If we go back to tariffs, you know, who liked tariffs?

The original Treasury Secretary, Alexander Hamilton, why did he like them for two reasons?

One brought revenue into, you know, the the new country, the United States of America two, he was of the opinion that it would protect nascent industries.

And I think we heard from President Trump on the debate on Thursday night and in other conversations, he thinks three that tariffs give him negotiating leverage.

So look, I, I think, you know, my inclination is when we hear 60% tariffs on China, that's the beginning of a maximalist negotiating position.

And that's the way President Trump negotiates.

I would be surprised if we ever hit that.

But I think given his record in Trump 1.0 he has a lot of credibility in using terrorists to negotiate I want to bring up a quote from Mike Wilson from Morgan Stanley.

He said risks are skewed to the downside for growth under Republican win scenarios due in part to immigration reform and tariffs.

And this echoes concerns more broadly that Trump's immigration policies would be inflationary because they would raise labor costs.

I mean, this is a real concern from some of the biggest banks on Wall Street.

What is your take on that?

Yeah, a again, I, I know Mike.

Well, uh, I think he was wrong on this.

I think to think that a Trump 2.0 or let's, let's go back to the whole arc of the news cycle.

Uh, you know, we, we began six or nine months ago with Biden.

Nos are great and Biden nos, you know, the, uh, that dog didn't hunt, uh, the American people didn't like Biden nomics.

Then the news cycle coming out of Delaware.

Um, you know, and kind of put forward by Paul Krugman, Greg.

Ip.

Alan Blinder was, well, it's just really a vibe session.

You know, the American people don't understand how really good they have it.

Um, you know, this inflation wasn't that bad even I thought it was a tone deaf remark by secretary Yellen, uh, last week when she said that she hadn't public, you know, that she hadn't personally seen inflation at the grocery store, but you know that the vibe session failed.

So now we're in part three and part three is conjuring a monster that somehow Trump 2.0 to define all logic is going to be inflationary or unbelievable.

As Larry Summers says, stag inflationary, you know, Trump 1.0 we had the non inflationary growth, some of the strongest growth, you know, we've had in 50 years and I think we're going to have the same thing again because, you know, if you counterbalance, first of all, with the tariffs, traditionally, you know, I'm, I'm a markets guy and economic historian.

Traditionally, you get a 50% what, whatever the level of the tariff is, you get a 50% appreciation of that amount in the currency.

So it's a 10% tariff.

We get a 5% currency appreciation which takes care of some of the inflationary effects.

We didn't see inflationary effects with the tariffs on China.

You know, we'll, we'll see with the labor, but I personally do not have a problem with the bottom 25% of American workers getting higher wages and the benefits they deserve.

You know, they have been crushed by this unfettered, unfettered immigration.

But, you know, but let's, let's go back to why Trump 1.0 was disinflationary, it, regulations were cut, you know, we had energy dominance and, you know, the uh energy prices were low and, you know, I think under those scenarios, it's almost impossible, you know, could they offset each other?

Sure, Scott, just to jump in.

I did want to zero in on the immigration piece specifically because there is a real concern that curbing immigration would lead to an increase in labor costs, which could fuel some of the inflation that the Federal Reserve has been fighting against.

And we currently have 8 million open jobs.

So the argument that curbing immigration would hinder job openings.

I struggle to see, see that.

Well, we think of it this way.

I think the 8 million job openings are, are not the people who are pouring across the border every day.

You know, they're, they're not going into jobs at Microsoft and you know, senior management.

So, you know, I I think that that's not right.

Um So, and you know, with the deregulation, what's really caused a lot of the Biden inflation is you've got a demand shock from, you know, this out of control, government spending 7% deficits and then you have a supply constraint from all the regulation.

So, you know, what we didn't talk about was I believe that a Trump 2.0 is going to get these budget deficits under control.

And that, you know, the theory of the price level says that once the budget deficits go down, inflation will come down.

Well, we've been talking about inflation.

I'm curious, I know you're under consideration for Treasury Secretary.

If President Trump were to get into the White House again, would you argue for firing Jerome Powell in that position?

The look.

II, I think President Trump understands that, you know, what anchors, uh inflation expectations is the credibility of the Federal Reserve.

I think Jerome Powell has done an extremely poor job, but I, I don't think it's anybody's advantage to fire him.

I think that his term will run out.

I think that he will be replaced.

And I think President Trump just like President Biden, you know, President Biden, even in the state of the Union called for lower rates from the Fed.

So I think, you know, President Trump is going to make his opinion known.

But, you know, I I would not advocate for replacing Jerome Powell before the end of his term at the end of his term.

Then who would you want to take that position?

Uh You know, II, I think that there is a very good list uh of um you know, both market participants, academics of former Fed officials.

I also wanna talk to you a little bit more about the fundraising piece.

Uh The former president has not publicly gotten support from a single Fortune 100 CEO.

That's according to several studies here.

I'm curious, do you know of any fortune 100 CEO s who are supporting President Trump privately?

Well, look, II, I actually think that that's a positive because, you know, under, under the Biden administration, big companies have done great and you know, they're rent seeking, they want to be adjacent to the government.

And, you know, I would also say that, you know, the Fortune 100 CEO S, what they may or may not think in private, they are terrified of their shareholders, they're terrified of their board of directors.

So I, you know, I put that, you know, that study came from, you know, Yale som, it was highly partisan, you know, I think that we are seeing private individuals.

I think we are seeing private companies.

So the fact that A CEO doesn't make hi his or her, you know, fundraising known, um, you know, I, I think it just speaks to, you know, kind of the rent seeking that we're seeing in the Biden administration when you give out a lot of government goodies, you know, you want to be on the receiving end.

All right, Scott, we're gonna have to leave it there, but we really appreciate you coming on to discuss this.

Thank you so much.

That was Scott Benson.

He's Key Square Group LP S founder and CEO.