Kevin Hassett, director of the National Economic Council and the current favorite to take over as Federal Reserve chairman, argued on Thursday President Donald Trump’s sweeping tariffs are playing a meaningful role in tackling America’s $38 trillion national debt. In conversation with billionaire David Rubenstein, the Carlyle cofounder, Hassett argued the first step to tackling the debt was to reduce it relative to target: “And we clearly are doing that with the big reductions in the deficit right now.”
Hassett continued, saying he’s not only bullish about growth in the economy, but “the fact that we have tariff revenue and we’ve got a lot more spending restraint than was here in the past.” He noted tariffs are an important part of Trump’s economic policy and “a lot of the revenue coming in to the Treasury” is from tariffs. Hassett cast tariffs as part of a broader supply-side strategy he said he believes can boost growth, widen the tax base and, over time, ease the debt burden.
Just a day earlier, at the DealBook Summit in New York, Hassett’s fellow cabinet member and Treasury Secretary Scott Bessent had described tariff revenues as more like a “shrinking ice cube” than a lasting fiscal fix. This aligned with the recent estimate from the Congressional Budget Office (CBO) that savings on the national debt had shrunk by $1 trillion between August and November, as trade deals resulted in a lower and lower effective tariff rate. Pantheon Macroeconomics found recently tariffs have brought in $100 billion less than the White House first expected, with a plummet in imports from China the main reason.
To be sure, the jump in tariff revenue from 2024 to 2025 is considerable, roughly triple or quadruple the level from the year before, as calculated by Apollo Global Management’s Torsten Slok in September (as shown below). But Hassett’s claim of spending restraint has been challenged by budget watchdogs, notably the Peter G. Peterson Institute and Committee for a Responsible Federal Budget, the former of which calculated the debt’s growth by $1 trillion in just two months was the fastest ever recorded outside of the pandemic.
Bessent defended the tariff regime in his interview with The New York Times‘ Andrew Ross Sorkin, saying tariffs are currently bringing in substantial revenue, and they are “good for labor.” He stressed the ultimate goal is to rebalance trade and rebuild domestic manufacturing, not to fund government permanently.
Supreme Court watching
The remarks from Bessent and Hassett comes as the Supreme Court weighs whether Trump overstepped by using the 1977 International Emergency Economic Powers Act to impose tariffs far beyond past presidents’ use of the law. Bessent said on Wednesday if the Supreme Court succeeds in throwing out many of the tariffs, it would be “a loss for the administration” and “a loss for the American people.”
Regarding the Supreme Court, Hassett said the use of an economic emergency law was justified by the the social damage from decades of large trade deficits and diminished wellbeing for American labor, as evidenced by “deaths of despair,” often fentanyl-related. Hassett said the administration is confident the Supreme Court will uphold Trump’s use of emergency powers to levy import charges. He also rejected the idea tariffs are inherently inflationary, calling them a one-time price shock rather than a persistent driver of rising prices, something that was echoed in Bessent’s interview with Ross Sorkin.
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