Trump Trade Confidence Europe: Bessent Says Markets Still Back America

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Aired on January 20, 2026. Transcript begins below and may contain minor errors.

STEVE BANNON (HOST): Mr. Secretary, you led the advance guard over there before the president arrived. Your message yesterday was take a deep breath. Ursula von der Leyen and the others saying, hey, we understand this is a permanent shift. We have to think about this permanently.

The markets are, you’ve been promoting and saying, hey, look, the Trump trade is a smart trade. The markets this morning, looks like they may be questioning that.

Dalio came out and said we may be going into capital wars where Europe are going to reallocate away from the United States. Your assessment, because you started off, there was a lot of swagger when the United States showed up. Is there going to be continued swagger when the president arrives?

SCOTT BESSENT (GUEST): Steve, good to be with you. And, you know, I can tell you here in Davos, remember their paper a few years ago that we should all be eating insects, and given the food here, I think I’d rather eat insects.

But to be serious, the president’s got plenty to swagger about. It’s been an incredible year. Peace deals, tax deals, trade deals, the Atlanta Fed GDP numbers, 5.3% forward inflation. Looks like it could be at the Fed’s target by the end of the summer, and we’ve got the hottest economy on earth.

Now, the Europeans are very good at value signaling. And if you remember, probably their most strident moment against Russia, Ukraine, was when they put the Ukraine flag up on the side of the EU Parliament building. I am sure that Vladimir Putin was quaking in his boots.

So look, the Europeans, they like to talk in these big terms. They are allies. They want to be under the U.S. umbrella, and they will be.

STEVE BANNON (HOST): Let’s go to, I want to talk about Ursula von der Leyen. She kind of gave a history of the U.S. currency as Bretton Woods, and, you know, about Nixon coming off the gold standard. She implied that that’s actually going to be in question.

When she talked about a new geopolitical realignment, she implied that this has to do with the U.S. currency. Then Ray Dalio came up and said, hey, you may see a reallocation. We may be heading into a time of capital wars.

Under your stewardship, it’s been quite evident with the president’s strategy and you executing that, the Europeans have piled into what you call the Trump trade, the America First trade, the MAGA trade.

Are you concerned at all, not just the geopolitical realignment, but the, I don’t know, it’s $100 trillion of assets. I think the European zone of our stocks and our bonds, sir?

SCOTT BESSENT (GUEST): Well, Steve, a couple of things. And I wanted to backtrack for a moment because I don’t believe that the markets are going down, or I don’t believe the primary catalyst for the market going down is the kerfuffle over Greenland.

I believe the markets are going down because the Japanese bond market had a six standard deviation move for the past two days. That would be in their ten year bonds.

I’ve been in touch with my economic counterparts in Japan and urged them to take the necessary measures to stabilize their bond market, but that’s spilling over into all bond markets. German yields are up. French yields are up. U.S. yields are up.

And again, it’s mostly the Japanese bond market. Got nothing to do with Greenland.

And the Europeans can shake their fist. They love regulation. They have low growth.

And our message to them has been, come, grow with us. Be part of our innovation economy. Because, Steve, imagine this, that Europe has no cloud of its own. It’s the U.S. and China.

How is it that 400 million people haven’t been able to develop that? And it’s just this overregulation.

And not my words. Mario Draghi, the former Prime Minister of Italy, former head of the ECB, issued a gigantic report called the Draghi Competitiveness Report. And he said that he believes that goods intra Europe are tariffed at about 50%. Services are tariffed at 100%.

So it is just this regulatory morass that Europe, they like to export regulations.

I’ve had many of our great U.S. tech executives, some I know you take shots at, rightly, tell me that it’s easier to do business in China than in the EU.

STEVE BANNON (HOST): A lot of people don’t realize your expertise in Asia and East Asia. I want to go to Japan for a minute since it’s such a significant ally.

She’s riding a wave of popularity, and she’s quite evidently anti CCP and very pro the American alliance in East Asia between Korea, Japan, Taiwan, and the United States.

SCOTT BESSENT (GUEST): Look, the prime minister is fantastic. She’s very popular. She’s called this snap election to give her a longer mandate.

But I think that they failed to recognize. Abenomics was a reflationary program. It brought Japan out of twenty years of malaise, a deflationary malaise. But that program has been running for fourteen years.

So what Japan doesn’t need is more stimulus. What they do need is to let the BOJ do their job.

So I’m confident that she, the economic team, will do whatever it takes to stabilize the message.

STEVE BANNON (HOST): You walked the audience through for months and months and months to say, hey, look, the big beautiful bill is a supply side tax cut. Here’s the bet we’re making.

It’s the last chance we’ve got to really do supply side, to focus on manufacturing, growing manufacturing.

Also, the tariff deals, you had a brilliant defense of it, I think. We played some clips at the top of the cold open about redoing the commercial relationships and how significant that was working, also to drive manufacturing.

Today, I think, or yesterday they announced the deficit for last year, over $2 trillion, up to $39 trillion debt.

You’ve told our audience for a long time, it said, hey, look, we’ve got our last chance to try to grow our way out of here.

Now the Atlanta Fed is saying real growth, particularly in the private sector, is over 5%.

Do you still hold with that, that you and President Trump believe we can actually grow our way out of here and that somehow in some future time this year, later this year, next year, we’re going to start getting our arms around the stimulus we’re putting into the economy, the $2 trillion deficits?

SCOTT BESSENT (GUEST): Well, Steve, for the calendar year, the deficit actually went down by about $200 billion. And a big reason for that was President Trump’s tariffs.

So we had a fiscal contraction, and then we grew the GDP, call it 3%, with about 1.5% inflation.

So the really important number to look at here is the deficit to GDP.

So 2024 deficit to GDP, calendar year, not fiscal year, was 6.9%. This past year, 2025, 5.4%.

So we have made a substantial dent in the deficit to GDP. That’s the important number.

That shows that we are growing our way out of this. So we brought the numerator down and we grew the denominator.

And if we keep this up, we’re well on the way to my 3% deficit to GDP by the time the president leaves office.

And, Steve, you know, the other thing that’s important here too, the reason we’re not making more progress on the deficit is because we are doing the immediate expensing of equipment, of factory structures, and of farm structures.

And that is productive. That is productive spending.

And so we take a tax hit on that upfront. Business people, any of your viewers who have small businesses, they buy an office computer, they can write 100% of it off. They build a new farm shed, they can write 100% of that off.

But you’re increasing the tax revenues the year after, the following years.

So it’s not just social spending that goes out the door never to be seen again. We are pulling the rubber band back further and further. So our economic potential gets bigger and bigger.