Be careful! The new US Treasury Secretary selected by Trump is about to hit the market

Wall Street's early evaluation of Treasury nominee Scott Bessent is out — and it's positive. But now the hard part begins.

In the next few months, Bezent will face huge challenges as he both appease the market and promote Trump's unconventional plans.

President-elect Trump suddenly announced on Monday night local time that on his first day in office, he will levy a 25% tariff on “all products” from Mexico and Canada, and a new 10% tariff on China.

If implemented after he takes office, these two measures may disrupt importers who want to gradually implement tariffs, and Bezent's own recent comments on tariffs and the Federal Reserve may also make his task more difficult.

But now, driven by optimism about this “investors' favorite” finance minister, the Dow Jones Industrial Average rose more than 400 points on Monday.

This optimism stems in part from more alternative choices such as Lutnick, where Trump ultimately chose an acquaintance with a long-term investment record in a macroeconomic environment as his chief economic officer.

Eurasia Group President Ian Bremmer said in a report Monday morning: “Trump's economic team is more pragmatic, and this is particularly true of Bezent.”

Here's why the honeymoon period he brought to Wall Street may be slowly coming to an end or be short:

The difficult issue of tariffs

The first tough issue will be tariffs.

At the beginning of this month, Bezent publicly expressed his love for Trump's tariff plan through a review article on the Fox News website. He was running for the job at the time. But he also offered some cautionary warnings to appease cautious businesses, in contrast to Trump's often-expressed desire to fully levy tariffs.

He wrote, “The strategic use of tariffs can increase the revenue of the Ministry of Finance, encourage companies to resume production, and reduce our dependence on industrial products from strategic competitors,” he repeatedly emphasized the need to focus on “strategically important industries.”

Bezent's critics have been spreading another of his comments in recent days. He said at the time, “Trump is actually a free trader,” and his goal is for Trump to “save international trade rather than return to turn-of-the-century tariffs.”

To put it mildly, this would clearly trigger a debate within the government.

During his campaign, Trump often talked about how tariffs themselves could increase revenue, and was often eager to restore the tariffs imposed during the 1890s administration of then-President William McKinley. Of course, the final decision belongs to Trump.

Jason Furman, a professor at Harvard University and chairman of Obama's former Economic Advisory Committee, said on Monday, “The bigger problem is that the main decisions about the economy will be made by President Trump. Trump has given us no sign that he is abandoning large-scale, full-scale tariffs, and I will be nervous until I hear this news.”

Left-wing objection—particularly with regard to the Federal Reserve

Another comment from Bezent's past may also be in the spotlight: his idea of a “shadow” Federal Reserve Chairman raised during the election campaign.

In an October interview, he proposed the idea that Trump could make current Federal Reserve Chairman Powell a “lame duck” long before his term ended.

Powell's full term as a member of the Federal Reserve Board of Governors will not end until 2028, but his term as Chairman of the Federal Reserve will end earlier, in 2026.

Bessent thought at the time that if Trump appointed a successor early, “based on the concept of forward-looking guidance, no one would really care what else Powell had to say.”

According to reports, Bezent has privately abandoned the idea, but on Monday, Senator Elizabeth Warren said the Federal Reserve may be a key factor in opposing Trump's choice of potential progressives.

“It would be a serious mistake for the Trump administration to interfere with the independence of the Federal Reserve,” she wrote in a statement.

As a current member of the Senate Finance Committee, Warren is likely to meet with Bezent several times over the next few years, and the former is likely to rise to the top position on the Senate Banking Committee in 2025. This is also an issue that the market will obviously pay close attention to.

Ed Mill, a Washington policy analyst at Raymond James, said in a Monday report that “any action that challenges the independence of the Federal Reserve is a constant concern in customer conversations.”

The right's discontent with the “business as usual” candidate

Bezent is also likely to face discontent from the right.

In a brutal selection process, he became Trump's choice, but some of Trump's closest allies publicly opposed him. Musk specifically called Bezent “a business-as-usual choice,” and his statement was not meant as a compliment.

Greg Valliere, chief US policy strategist at AGF Investments, said in a report on Monday that Bezent will be “a member of the moderate cabinet and is supported by both parties.”

In fact, since Bezent became a popular candidate for the position a few weeks ago, questions about him have been raging among right-wingers in the Republican Party. Most of these concerns stem from his previous experience as an investment executive at Soros Fund Management, and Soros is the number one “villain” in right-wing circles.

Basent left Soros Fund Management in 2015 and co-founded his own investment company, Key Square Group.

In recent years, Bezent has been a generous Republican donor, donating more than $3.1 million to Trump and other Republicans during the recent election season, according to government records.

But before that, he had donated money to Democrats and Republicans, including Hillary and Obama.

Can he deliver on his promise to cut taxes?

Another point of pressure that Bezent faces is to fulfill Trump's campaign promises to fully extend his 2017 tax cut plan and a dazzling array of additional tax cuts.

It is likely that Bezent will be responsible for making sure that these tax cuts are realized. In an interview with the Wall Street Journal last weekend, he said these tax cuts are a top priority.

But the path ahead is far from certain. The federal corporate tax rate is likely to receive particular attention from the market and be particularly politically controversial.

Trump has promised that the current 21% tax rate will be reduced to 15%. But some in his own party say the rate may stay the same — or even accept a 25% increase if they can pay for other priorities.

For Trump and Bezent, the bigger problem with turning these tax cuts into law is probably the $36 trillion national debt, and the question of whether any new expensive tax cuts are possible.

Chris Whalen, Chairman of Whalen Global Advisors, spoke relentlessly about future financial challenges. He said:

“Trump may not have a chance to do what he wants. When the debt gets this big, you have fewer and fewer options.”