Bessent: Baby Goods Exemption 'Under Consideration'

However, President Donald Trump, when asked about Bessent's comment in front of the House Financial Services Committee, said he'd rather keep the tariffs simple, and not have "so many" exemptions. He did say he'd "think about" exceptions for these goods.

It was Bessent's second day on Capitol Hill, following a morning on May 6 at the House Appropriations subcommittee that writes the funding bills for the Treasury Department.

Very little criticism of the president's tariff policy came from the Republicans who hold the majority in Congress, though there were two members of the House Financial Services Committee who suggested that the course of action may hurt -- or is hurting -- their districts.

Rep. William Timmons, R-S.C., told fellow South Carolina resident Bessent that nearly one in 10 of his constituents works for either BMW or one of the carmaker's suppliers. South Carolina is the No. 1 automotive exporting state, he noted. He asked if the BMW investment over decades is the type of investment the government wants to encourage.

Bessent replied that he believes the president recently met with the heads of Volkswagen, BMW and Mercedes, and that the companies are "working toward a solution of more American content," so that their activity in the U.S. is deeper than just assembling cars.

Timmons also pushed back on Bessent's recent comment that the president is seeking to add sophisticated manufacturing jobs, not the kinds of textile jobs South Carolina had in his youth.

Timmons complained that hundreds of thousands of jobs were lost in the South in the 1970s and 1980s, which he attributed to onerous labor and environmental regulations making U.S. production uncompetitive.

"I agree with your broader point -- we should not return to producing low-quality goods just for the sake of manufacturing in the United States," Timmons said, but asked if the administration prioritizes support for domestic textile factories that still exist.

Bessent replied, "The survivors in this industry, they have done it through innovation," and added, "through good tariff policy, we can make sure these still survive."

Rep. Young Kim, R-Calif., told Bessent that the ports of Los Angeles and Long Beach, in her district, are already seeing year-over-year drops of about 35%. "Cargo volume is one of the economic drivers in the region," she said, and if it falls, dockworkers and truckers will lose their jobs. She asked: "How can you ensure that our tariff policy will not unintentionally harm small businesses and workers in the long term?"

Bessent argued that the combination of tax cuts, deregulation and tariffs will help the U.S. economy in the long term, but Kim was not satisfied, saying that she is concerned that if the tariffs remain for the long-term, small businesses will be harmed.

More than a dozen Democrats criticized the trade war, and asked for more information about trade deals that Bessent has said are in reach.

On Tuesday, May 6, Bessent said that with 17 of the 18 most important trading partners, he expects those countries will substantially reduce tariffs on American exports and non-tariff barriers, including capital and labor subsidies.

He said nearly all the trade deficit is with the 18 trading partners, and that, setting aside China, he would be surprised if nearly all talks aren't "wrapped up by the end of the year. That may be much sooner. I would think that perhaps as early as this week, we will be announcing trade deals with some of our largest trading partners. They have come to us with very good offers.”

On Wednesday, May 7, Rep. Nydia Velazquez, D-N,Y., asked him to name the countries that are very close to settlement.

He said the negotiations are ongoing, and said, "I'm not going to reveal the details."

Velazquez asked if these deals are more than memorandums of understanding. "I believe they will be agreements in principle and we will paper them over in months," he said.

Bessent didn't say what the U.S. might do with its tariffs if the administration is satisfied with the market-opening from trading partners.

Rep. Mark Pocan, D-Wis., told Bessent that the on-again, off-again tariffs have small businesses "really worried."

"You made a comment about [how] cargo volumes have dropped 60%, you see this as a temporary detox, but for a small business that’s getting by day to day, that’s much bigger,” he said.

Rep. Gregory Meeks, D-N.Y., argued forcefully that a trade deficit cannot be an emergency if it has gone on for 40 years, and that Congress should be deciding tariff policy, not one man. Bessent said that the prolonged trade deficit is an emergency, because it has hollowed out manufacturing.

Rep. Marlin Stutzman, R-Ind., told Bessent that his district has more manufacturing than nearly all others, and that his region has seen jobs leave because of bad trade policies over the years. Now, he said, GM truck production is increasing, and Rolls-Royce, which makes aircraft engines in Indiana, is planning to shift production to the U.S. to avoid tariffs.

But Rep. Ritchie Torres, D-N.Y., argued that the tariffs are absurd, and argued that imposing tariffs on manufacturing components is not going to lead to 100% made-in-America supply chains.

He said Boeing's 747 airplane has 6 million parts. "There is no universe where we're going to manufacture all six million components in the United States," he said.

Bessent said, "I acknowledge that supply chains are wide," then tried to change the subject to the auto parts that can be imported duty-free under the president's policy. Torres cut him off.

Rep. Brad Sherman, D-Calif., noted that L.A. had thousands of houses destroyed in the fires in January, and that the National Association of Homebuilders says that current tariff policy -- not including the possibility of higher tariffs on framing lumber, cabinets and millwork -- costs $11,000 per home. Sherman asked that tariffs on building supplies be waived, given the affordability crisis in housing.

"I will look into that matter," Bessent replied.

At least one Democrat, as Timmons did, supported free trade for one sector and protectionism for another. Rep. Vicente Gonzalez, D-Texas, told Bessent that oil companies need tariff relief.

Bessent said dryly, "You and I must speak to different energy executives," and argued that a supply increase from OPEC is more damaging to oil producers' profits than higher costs for equipment and pipes.

Gonzalez then told Bessent that shrimpers have been ignored, and the industry is "on the verge of collapse," and asked if the administration would impose tariffs to help the shrimp industry.

Bessent pointed out his inconsistency on tariffs.

Gonzalez replied, "I don't like tariffs on our energy sector, we do need tariffs on some sectors."

Bessent said, "I agree. I'd be happy to work with you on this."