A House Financial Services Committee hearing descended into chaos and personal invective on Tuesday as Treasury Secretary Scott Bessent clashed with Ranking Member Maxine Waters (D-CA) over the economic impact of President Trump’s tariff policies. What was ostensibly a heated exchange about inflation and housing costs culminated in a tense standoff in which Waters repeatedly silenced the secretary of state, telling him “you can’t talk” and questioning his dignity as he tried to interrupt her questioning.
The confrontation started with Waters beats Bessant She describes it as a convenient evolution of his economic philosophy on tariffs. Waters asked if the secretary of state had written to hedge fund investors warning that “tariffs will cause inflation.” Bessant responded with a terse “no.”
Bessant has denied it despite reports dating back at least a year. wall street journalof Nick Timiraos on Xthe Finance Minister wrote the same point in February 2024. “Tariffs are inflationary and will increase the value of the dollar,” Bessant wrote to his hedge fund investors. “This is not a good starting point for an American industrial renaissance… The tariff gun is always loaded and on the table, but rarely fired.”
Are tariffs an inflation tax?
Waters is undeterred, pointing out new york times The article cited Bessant’s testimony before a Senate committee last summer, in which he allegedly claimed that “there is no inflation and tariffs are not passed on to consumers” and dismissed critics as suffering from “tariff chaos syndrome.” Waters sought to clarify the secretary of state’s current position, explicitly asking whether tariffs would drive up costs. Bessant countered, citing the San Francisco Fed and “150 years of data” to argue that “tariffs don’t cause inflation.” In this, he relies on historical research showing that tariffs represent a relatively small share of gross domestic product and that many large inflationary events are driven by wars, oil shocks, or monetary policy rather than trade barriers, so even if specific goods become more expensive, the macroeconomic impact often appears small.
The questioning took a sharp turn when Waters highlighted contradictions in the government’s recent messaging. She pointed out that Bessant told fox News emerged in November that the government intended to reduce tariffs on goods such as coffee and bananas to “rapidly lower prices.”
“Mr. Secretary, if tariffs are not going to cause inflation, why do we need to announce this?” Waters asked, challenging the “Trump logic” that tariffs would be paid entirely by foreign countries. “Tariffs on coffee or bananas shouldn’t raise prices for American consumers… but that’s not the reality. It does raise prices across the board.” Waters believes that imposing tariffs on goods that are not produced in the United States will only “punish American consumers.”
When the discussion turned to the housing crisis, tensions in the room increased. Waters blames the Trump administration for exacerbating affordability issues by imposing tariffs on key building materials such as lumber, steel and appliances. She asserted that these policies would result in “half a million fewer homes being built when we need to build more homes, not less.”
As Waters spoke, Bessant tried to interject, noting that lumber was trading at its lowest point in five years. In fact, lumber futures are not at a five-year low at $589.50, but were at $469 in January 2023.
Bessent’s interruption immediately triggered a severe rebuke from senior members. “Take my time back. You can’t speak,” Waters declared, refusing to give up the floor. Waters’ patience visibly broke as Bessant continued to speak for her, trying to blame the housing shortage on “mass immigration” and “ten million immigrants” entering the country.
“Can you maintain a level of dignity?” Waters snapped as the two spoke to each other.
The committee chair eventually intervened, saying “this woman’s time has come,” despite Waters’ protests that the secretary’s interruption was a waste of her time.
Overall, Waters’ skepticism is consistent with research showing high transmission of tariffs to import and retail prices, the large contribution of Trump’s tariffs to headline inflation, and significant cost impacts in industries such as homebuilding where input tariffs hit concentrated supply chains. Bessent’s response was Consistent with the argument that tariffs account for a limited share of total consumption, they therefore cannot explain much of the recent surge in inflation, which has been largely driven by services.
In the current field of research, substantial evidence supports the conclusion that Trump’s tariffs caused modest but significant inflation at both the commodity and aggregate levels, even if they were not the primary driver of overall inflation. The hearings heightened this tension: Bessant effectively argued that “modest” equals “irrelevance,” while Waters emphasized that the tariff-driven portion of inflation was politically and materially important for households squeezed for housing and groceries.
For this story, wealth Journalists use generative AI as a research tool. Editors verified information for accuracy before publication.