Wall Street Gets Rude Shock as Bessent Plays Second Fiddle on Tariffs

 

Wall Street Gets Rude Shock as Bessent Plays Second Fiddle on Tariffs
By Steven Orlowski, CFP, CNPR

New York, NY — April 5, 2025
Wall Street was left reeling Friday morning after an unexpected move by the White House on tariff policy sent markets into a tailspin—and revealed a surprising shift in influence among the administration’s economic advisers.

Scott Bessent, long regarded as a key behind-the-scenes architect of the administration’s market-facing strategy, appeared visibly sidelined during Thursday’s announcement of sweeping new tariffs on Chinese medical device components and semiconductors. Instead, the spotlight was seized by Assistant Trade Representative Maya Lang, an economist with deep ties to the protectionist wing of the administration.

The announcement blindsided markets that had been betting on a more conciliatory trade tone following recent positive signals out of Beijing. The Dow plunged 643 points by midday, while the tech-heavy Nasdaq fell 3.7%, reflecting fears of a reignited trade war at a time when global growth is already under pressure.

“The Street has long viewed Bessent as a voice of reason—someone who understands capital flows and market psychology,” said Henry Sloan, head of macro strategy at Keller & Wright. “For him to be elbowed out like this, especially on a market-moving issue, is a rude awakening.”

Bessent, the former Soros Fund Management CIO and founder of Key Square Group, was brought in early in President Carver’s term to lend economic gravitas to an otherwise ideologically divided economic team. While never one to seek the limelight, his counsel was widely credited with tempering more hawkish trade voices within the administration—until now.

Thursday’s tariffs, announced in a hastily arranged press conference, mark a significant escalation. They target $32 billion in high-tech imports from China, many of which are critical to American manufacturing and healthcare sectors. Markets had expected a modest tariff tweak or delay, particularly after Bessent had signaled earlier this month that “continued engagement with Beijing is bearing fruit.”

But Lang, who stood alongside Trade Representative Eleanor Cortez, described the measures as “necessary course corrections to protect American innovation and national security.” When asked about Bessent’s absence, Cortez offered a tight-lipped “no comment.”

Sources close to the matter suggest a growing rift within the administration, as the upcoming midterms push political operatives to adopt tougher postures on trade. With Bessent’s market-savvy pragmatism increasingly at odds with electoral calculus, it appears the balance of power is shifting.

“This is a real blow to investor confidence,” said Mariela James, chief global strategist at Elara Capital. “Markets don’t just react to policy—they react to the people behind the policy. If Bessent is no longer steering the ship, that changes the calculus.”

In the aftermath, analysts are bracing for continued volatility. Treasury yields dropped as investors fled to safety, while the VIX—Wall Street’s so-called fear gauge—spiked above 22 for the first time in months.

Bessent himself has remained silent publicly, but sources say he was “deeply frustrated” by the rollout. Whether this marks a permanent change in his standing—or a short-term political play—remains to be seen. But for now, Wall Street is grappling with an uncomfortable new reality: the grown-ups may no longer be in the room.