No. of Recommendations: 4
It’s worth paying attention when Treasury Secretary Scott Bessent explains a new U.S. economic policy…especially when Mohamed A. El-Erian says so.
nytimes.com - Scott bessent trade economy
America Was Being Played. The Bessent Doctrine Says Those Days Are Over.
By Mohamed A. El-Erian, The New York Times, July 7, 2026
Treasury Secretary Scott Bessent delivered a remarkably important speech on June 23 at the Economic Club of New York…Mr. Bessent put down a marker for how the United States plans to operate in a changing global economic system…
The leaders of tomorrow — whether destined for the C-suite or public service, in America and beyond — must adapt to this new world. It’s one in which considerations of national security, domestic politics and geopolitics no longer play second fiddle to traditional business interests in determining corporate and economic outcomes. Those business interests are now being actively sidelined…
The cementing of this economic regime change is based on Mr. Bessent’s unsparing diagnosis that, for decades, the United States was being played. America had essentially failed to recognize that economic security is integral to national security. Policymakers mistook historical comfort for enduring strength, operating under the naïve assumption that a growing roster of trading partners would engage with global markets fairly. Those days are over, he warned: “America welcomes its partners, and we are stronger because of them. But our partnership now carries expectations. And, in some instances, nonnegotiable obligations.”…
Five core principles now underpin the administration’s doctrine of economic statecraft:
National economic capacity is critical to economic security.
Trade and investment openness must be strictly reciprocated.
The United States must proactively set standards for emerging technologies.
The global dominance of the U.S. financial system must be actively protected and leveraged as an instrument of statecraft.
All of this must be aimed at visibly improving the welfare of American households.
The more likely outcome will be the broader weaponization of tariffs, investment and payment systems against economic rivals. This will be accompanied by a more forceful industrial policy, increased use of export restrictions and mounting pressure on third parties, including the threat of secondary sanctions… [end quote]
The previous policy optimized efficiency and resulted in lower prices for consumers. Any policy which moves away from this optimized state in order to increase national security, supply chain robustness, near-shoring or other factors mentioned in the article will be inflationary.
This is a major trend change that has already resulted in tariffs and other policies. The point is that these policies will now continue and be increased since they are part of a coherent strategic trend change.
Investors, take note.
Wendy
