The most important American in the world right now might not be Donald Trump. It could be Scott Bessent, the Treasury Secretary, who is exercising America’s financial muscle in highly interesting ways across the world.
This week the US joined the Japanese government in an intervention to prop up the yen – the first time America and its ally have done so since 1998, at the height of the Asian financial crisis.
Financial analysts have been critical of the move, especially Bessent’s promise to do “whatever it takes” to support Japan’s currency and his willingness to lift the $60 billion cap on the emergency facility. The fear is that, at a time when Federal Reserve chairman Kevin Warsh remains eager to tighten the balance sheet, Bessent is taking on more debt. But the imperative for America seems to be to create a new mechanism for backing the yen that avoids the vulnerabilities exposed by “carry trade” speculations, which in 2024 caused a sharp dip in Japanese and US stocks.
Bessent’s talk of a deal to reopen the Strait of Hormuz has lifted markets – arguably far more than Trump’s remarks on social media
Yet, at a higher level, the move also reveals the Trump administration’s eagerness to back political partners through the markets to counter the influence of China, its greatest geostrategic adversary.
Just as China uses sovereign debt to buy up control in struggling nations, so Trump’s America is taking dramatic steps to shore up allies in need, especially those who are willing to back American industry and exports. With one hand, Team Trump imposes tariffs or even more punitive sanctions. With the other, it gives currency boosts to useful partners.
The White House likes Sanae Takaichi, Japan’s first female prime minister, whose country has committed to large investments in the US in recent months. And the success of Japan, China’s neighbor and historic rival, is a crucial piece of the White House’s broader strategy for containing the influence of Beijing.
Team Trump has also taken aggressive military action to fend off Chinese encroachments in Latin America – the Venezuela raid in January being the most dramatic example. But that strategy has been combined with financial help for anti-socialist forces throughout the region. In October last year, Bessent moved quickly to bolster the Argentinian peso, which enabled the libertarian president Javier Milei to bring down inflation and win some crucial elections. And after starting the Iran war, the Treasury cooked up a scheme to boost the United Arab Emirates’ dirham with dollars. It’s not just about market mechanics. It’s about supporting, reviving and rewarding countries which support Washington over Beijing.
Bessent has also played a key role, since before the war, in ramping up sanctions against Iran – as part of what he now calls “Operation Economic Fury.” And this week it has been Bessent’s talk of an imminent deal to reopen the Strait of Hormuz that has lifted markets – arguably far more than Trump’s wild remarks on social media and elsewhere.
None of this is to say that Bessent is not acting out Trump’s wishes. The President remains the ultimate decision-maker. But Bessent is the one attempting to carry out his boss’s radical and often confusing agenda without collapsing the global economy. That makes him a historically significant figure.
He’s played a larger diplomatic role than Treasury Secretaries normally do. And he’s still negotiating a new tariff settlement with the great dragon in the East.
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