US Treasury chief defends Trump’s right to fire Fed governor, expects court to uphold tariffs

ARLINGTON, VIRGINIA: US Treasury Secretary Scott Bessent said on Monday (Sep 1) that the Federal Reserve is and should remain independent but argued it has “made a lot of mistakes,” while defending President Donald Trump’s right to fire Fed Governor Lisa Cook over mortgage fraud allegations.

Bessent also expressed confidence that the Supreme Court will uphold Trump’s use of emergency powers to impose sweeping tariffs, though he acknowledged the administration has a backup plan if the courts strike them down.

FED INDEPENDENCE DEBATE

“The Fed should be independent. The Fed is independent, but I, I also think that they’ve made a lot of mistakes,” Bessent told Reuters in an interview at a diner outside Washington.

Trump last week fired Cook, the first Black woman to serve on the Fed’s Board of Governors, after William Pulte, head of the Federal Housing Finance Agency, accused her of mortgage fraud. The Justice Department has not filed charges.

Bessent said Cook should resign if the allegations are true and questioned why the Fed had not conducted its own review. “She hasn’t said she didn’t do it. She’s just saying the president can’t fire her. There’s a big difference,” he said.

Cook has denied wrongdoing and is suing Trump and the Fed, arguing the president lacks legal authority to remove her. Her supporters contend the allegations are a pretext to let Trump appoint an ally to push his economic policies.

Independent central banks are widely seen as crucial for financial stability, and Trump’s interventions have raised questions about Fed autonomy. But Bessent dismissed concerns. “The S&P’s at a new high and bond yields are fine. So we haven’t seen anything yet,” he said.

TARIFFS AND THE COURTS

Separately, Bessent said he was preparing a legal brief for the US solicitor general to defend Trump’s use of the 1977 International Emergency Economic Powers Act (IEEPA) to levy tariffs. A US appeals court ruled last week that most of Trump’s tariffs were illegal but left them in place until mid-October while the administration appeals.

“I’m confident the Supreme Court will uphold it – will uphold the president’s authority to use IEEPA. And there are lots of other authorities that can be used – not as efficient, not as powerful,” he said.

Among those alternatives, he pointed to Section 338 of the 1930 Smoot-Hawley Tariff Act, which allows the president to impose tariffs of up to 50 per cent for five months against imports from countries that discriminate against US commerce.

Bessent argued that the influx of fentanyl, linked to 70,000 US deaths annually, justified Trump’s emergency tariff powers. “If this is not a national emergency, what is? When can you use IEEPA if not for fentanyl?” he said.

POLITICAL AND GLOBAL CONTEXT

Bessent said Trump’s tariffs were aimed at addressing decades of widening trade deficits that risked reaching “a tipping point”. He dismissed concerns that tariffs were drawing Russia, China and India closer together, calling recent Shanghai Cooperation Organization meetings “performative”.

He added that Washington was making progress in persuading Europe to join in penalising India for its Russian oil purchases but did not comment on whether similar steps were planned against China.

Bessent also urged the Senate to quickly confirm Stephen Miran, Trump’s nominee for the Fed board, to replace Adriana Kugler who resigned on Aug 1. “We need him in place for the September policy meeting,” he said.