Treasury Secretary Scott Bessent has weathered market turbulence from President Donald Trump’s trade wars, the administration’s clashes with the Federal Reserve and battles with fellow officials.

But his biggest challenge may lie ahead, with signs that the economy is faltering just eight months into the Trump presidency.

Throughout Trump’s second term, Bessent has built strong credibility with financial markets even amid significant policy confusion and bolstered his relationship with the president, cementing his role as a power center in the administration. Stocks have continued to climb even as tariffs have eaten into corporate profits and growth has slowed.

Now, however, the labor market is losing momentum, while inflation is ticking back up. The housing market is largely frozen because of high mortgage rates, and swelling fiscal deficits are fueling pressure on the cost of government debt.

A more painful economic slowdown, particularly one accompanied by falling markets, would test Bessent’s mettle in new ways.

“There’s a high degree of confidence right now in the competency of the team at Treasury,” said one person close to the White House who was granted anonymity to speak more freely about administration personnel. But “there are some concerns about whether these problems are just unmanageable, without a lot of pain. There’s going to be pain. The question is … what can you do to mitigate it?”

Bessent has maintained a reputation on Wall Street as being level-headed and rational, despite whipsawing trade policies and high-profile conflicts with other Trump advisers, such as Elon Musk, and most recently, housing finance regulator Bill Pulte. POLITICO reported that Bessent threatened to punch Pulte at a private dinner attended by dozens of other people after Pulte allegedly badmouthed him to the president.

Regardless of that episode, Bessent has demonstrated considerable staying power in the administration.

“He is a calming force,” said Scott Wren, senior global market strategist for Wells Fargo Investment Institute. “The financial markets in general have some confidence that things aren’t going to go too far off the rails if he has a lot of influence.”

People familiar with their relationship say Bessent enjoys a particularly close relationship with Trump that is centered on the president’s respect for the Treasury chief’s advice.

“He got picked because he convinced the president that he could give the president honest analysis of different policies and what the outcomes might be of those policies,” said a second person close to the White House, also granted anonymity. “Let’s just say, President Trump respecting the judgment of others on things he himself knows a lot about is not [his] usual approach to things.”

“Scott has given him good advice,” another person with close ties to the administration said. “There are weird scenarios where [Trump] doesn’t quite want the yes person. He wants to be told not no, but not yes.”

That confidence in Bessent has been vindicated by the seemingly positive feedback loop between him and markets.

Stocks plunged in early April when Trump announced his sweeping new tariff regime, where the levies were set much higher than investors were expecting. Stress in bond markets prompted the president to change course, partly based on Bessent’s counsel. Trump then made Bessent one of his lead trade negotiators — and equities have since steadily recovered, repeatedly hitting fresh record highs in recent months.

The Treasury chief was also an important voice in advising the president that he was risking market turmoil if he were to attempt to remove Fed Chair Jerome Powell. Another indicator of Bessent’s relationship with markets: Yields on government debt that matures in 10 years — a key benchmark for mortgages and consumer loans and a central focus for Bessent — have eased during his tenure even as bond investors have grown more nervous about the ballooning federal debt.

But Bessent can’t count on faith from markets alone to maintain his reputation. Stocks have been driven upward by the artificial intelligence boom, and the economy has held up better than many feared in the wake of the highest tariffs in a century. A pessimistic turn on either front could lead to a sudden plunge in markets, as could other unexpected shocks.

“You should never, as a policymaker, take credit for what happened to equity prices,” said Vincent Reinhart, chief economist of investments at BNY. “It can break your heart a couple of weeks later — or sooner than that.”

Still, people close to the administration said Bessent has enough goodwill as a communicator on behalf of the president that he’s likely to remain a central figure even in the event of an economic crisis.

“Scott is one of the most respected members of the administration,” the first person close to the White House said. “Period.”