'It's More A Mag 7 Problem Than A MAGA One,' Says Bessent As Wall Street Implodes

As Wall Street crumbles under the weight of tariffs and deepening economic fears, Treasury Secretary Scott Bessent is pointing the finger not at the Trump administration policy but at the market’s former darlings.

Speaking on the Tucker Carlson Podcast Friday, Bessent said the ongoing equity sell-off is "more a MAG Seven problem than a MAGA one," referring to the mega-cap tech leaders—Microsoft Corp. (NYSE:MSFT), Apple Inc. (NASDAQ:AAPL), NVIDIA Corp. (NASDAQ:NVDA), Alphabet Inc. (NASDAQ:GOOG) (NASDAQ:GOOGL), Amazon Inc. (NASDAQ:AMZN), Meta Platforms Inc. (NASDAQ:META) and Tesla, Inc. (NASDAQ:TSLA)—that have led markets for much of the past two years.

While Bessent delivered his remarks, the S&P 500 and Nasdaq 100 indices were tumbling through their worst week since March 2020, hammered by mounting fears of tariffs, inflationary pressures, and potential global retaliation that triggered a sharp selloff in risk assets.

The iShares Semiconductor Index (NYSE:SOXX) is down by an astonishing 17% this week alone, on track for its worst weekly decline since 2001, at the peak of the dot-com crash.

Apple Inc., the largest U.S. company by market cap, is suffering its worst 2-day selloff since 2013, shedding over $500 billion in value alone. The carnage has erased trillions of dollars in paper wealth, hammering retirement accounts, mutual funds, and 401(k) balances across the country.

It's DeepSeek, Not Tariffs, Bessent Claims

Bessent insists the real trigger was not Trump's universal tariff plan but a reassessment of U.S. tech valuations following China's DeepSeek AI breakthrough.

In his words, the sell-off "started with DeepSeek," suggesting that Wall Street had priced in AI dominance prematurely and is now correcting that assumption.

"This isn't about tariffs, it's about a dose of reality in the AI space."

Bessent Defends Tariff Revolution

“This is transformational for the American economy, the American worker, and the new Republican alignment," Bessent said.

Bessent didn't shy away from defending the economic rationale. He cited new MIT research showing that the Trump administration's original 20% tariffs on China only lifted U.S. prices by 0.7%, suggesting that foreign producers absorbed much of the impact.

Bessent emphasized that tariffs are about more than just economics—they’re about security. "Economic security is national security," he said, referencing COVID-19 as a wake-up call that exposed the fragility of global supply chains.

"We don't make our own medicine, our own chips, or our own ships," Bessent noted, advocating for reshoring critical industries to prevent strategic vulnerabilities.

The administration's long-term strategy, according to Bessent, is to use tariffs as a bridge: boost revenue in the short run while incentivizing companies to build domestically, thereby reducing the need for tariffs altogether.

"First, we collect. Then, we build. Then, the tariffs drop—but revenue from taxes and jobs goes up."

“We’re pushing to get the tax bill done so we can guarantee the low taxes,” he added.

Bessent dismissed the threat of retaliation from global trading partners, indicating that surplus nations like China and Germany are in no position to strike back effectively.

"We are the debtor nation. We have the trade deficits. The surplus nation is in the weaker position," Bessent said, asserting that China's economic model—heavily reliant on exports—is "the most unbalanced in the history of the modern world."

"I think President Trump has broken their business model with these tariffs," he said.

"They [China] can't survive without it [the surplus]."

"I think the Europeans are going to have to rebalance, too," he noted, pointing to Germany's overdependence on exports and expensive energy policies as unsustainable.

Market Reactions

Stocks deepened their decline in afternoon trading in New York, with investors finding little comfort from either fiscal or monetary leaders.

Earlier in the day, Fed Chair Jerome Powell reaffirmed that the central bank is in a strong position and sees no urgency to begin cutting interest rates.

The S&P 500 index – as tracked by the SPDR S&P 500 ETF Trust (NYSE:SPY) – is down 5%, on track for its worst day in five years.

The tech-heavy Nasdaq 100 – tracked by the Invesco QQQ Trust (NASDAQ:QQQ) – sunk 5.1%, eyeing its worst day since March 2020.

Within Magnificent Seven stocks, Tesla fell 9.8%, followed by Nvidia’s 7.2% decline.

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