Wall Street Titans to Enact the Trump 2.0 Agenda

President-elect Donald Trump, the self-described Tariff Man, took to Truth Social late Nov. 25 and declared that he would impose steep levies on Canada, China, and Mexico. On his administration's first day, Trump will sign an executive order slapping a 25% tax on Canada and Mexico and an additional 10% tariff on China: "above any additional tariffs." This is a sign of more things to come as his inner circle has essentially endorsed the Trump 2.0 economic agenda, from incoming Treasury Secretary Scott Bessent to Commerce Secretary Howard Lutnick.

Trump Chooses Lutnick for Commerce

After what was likely a scene from the classic films Advise and Consent or The Best Man, the president-elect finally selected two significant Cabinet-level roles: secretaries of the Treasury Department and Commerce Department. The financial and betting markets kept speculating whom Trump would choose for these senior roles after sifting through Wall Street preferences, Elon Musk endorsements, and the best men to deploy his doctrine’s tenets.

First, Trump picked Lutnick, a billionaire executive from Cantor Fitzgerald and BGC Partners. One of Trump’s top salesmen on the campaign trail, Lutnick serves as the co-chair of the transition team. After a glowing social media review from the Tesla Motors and SpaceX billionaire, it was widely believed that Lutnick would become Treasury Secretary, knocking Bessent off the top of Polymarket.

“Bessent is a business-as-usual choice, whereas @howardlutnick will enact change,” Musk said in a Nov. 16 X post. “Business-as-usual is driving America bankrupt, so we need change one way or another.” Robert F. Kennedy Jr., tapped to head the Department of Health and Human Services, followed this up in response to another billionaire who touted Bessent: "Bitcoin will have no stronger advocate than Lutnik [sic]."

With Lutnick as commerce secretary, the White House will have a solid advocate for tariffs. As seen by his predecessors, Wilbur Ross and Gina Raimondo, the commerce position has transformed into a vital role in the administration. In addition to overseeing 47,000 employees, Lutnick will now manage various bureaus and sub-agencies that handle such crucial issues as intellectual property rights and export controls. Tariffs will also be in his vast portfolio since the department maintains authority over the Section 232 national security trade statute, which Trump utilized in his first term to introduce a 25% tax on imported steel and a 10% levy on imported aluminum.

Indeed, Lutnick has been a staunch proponent of tariffs. Throughout his media circuit, speaking to CNBC and CNN, he claimed that tariffs can be a substantial revenue generator and a strong negotiating tool. Calling it a "win-win scenario," here is what he told the business news network's Squawk Box in October:

“Do we make a lot of money on tariffs, or do we bring productivity here, and we drive up our workers here? It’s a win-win scenario. I like both of them. I think what’s going to happen is we’ll make a bunch of money on the tariffs. But mostly everybody else is going to negotiate with us, and we’re going to be more fair.”

He later said to the raucous pro-Trump audience at the Madison Square Garden rally ahead of the presidential election that America was truly great at the turn of the 20th century when the country "had no income tax, and all we had was tariffs."

Today, the United States generates approximately $75 billion in annual tariff revenues, accounting for a minuscule share of the federal government’s record tax receipts. Various economists and think tanks estimate that Trump’s proposed trade plans – 10-20% on all imports and 60-100% on all Chinese goods coming into the United States – would generate about $3 trillion over the next ten years. As for a negotiating strategy, this is the consensus of all Trump’s men and women. However, the other uniform opinion is that these tariffs will raise prices, lower growth, and harm economic growth prospects.

China will be a crucial file for the incoming commerce secretary, too. Chips have been at the center of the tense US-China relationship, but other issues, such as artificial intelligence and drones, have come into focus. As Raimondo told CBS last year, "The Commerce Department is at the red-hot center of technology."  The difference this time, compared to several years ago, is that Beijing is in a far weaker economic position. Since the first Trump-era trade agreement failed to accomplish much of anything, the second term could see a tighter deal with Chinese leadership.

Trump Selects Bessent for Treasury

The financial markets were jubilant when Trump picked the founder of Key Square Group to head the Treasury Department. Bessent supports all of Trumponomics, though with a more conservative approach. In interviews with CNBC, the Financial Times, and Bloomberg TV, Bessent has recommended introducing tariffs incrementally to prevent an immediate spike in consumer prices and to allow disinflationary efforts to offset higher costs. He also accepted that Trump’s “maximalist” stances could be watered down and help decrease the escalation in trade strife.

But, while tariffs have been baked into the cake, investors were not homing in on this after Trump officially announced Bessent. Instead, the billionaire Wall Street financier is considered a fiscal hawk, meaning he wants to slash the budget deficit, which came in at $1.8 trillion in fiscal year 2024, the third largest on record.

Speaking at the Manhattan Institute this past summer, Bessent outlined his 3-3-3 plan, an economic initiative influenced by the late Japanese Prime Minister Shinzo Abe and his Three Arrows economic recovery plan. The incoming Treasury Secretary’s blueprint for financial success is growing the economy by 3%, boosting daily oil production by three million barrels, and lowering the deficit to GDP ratio to 3%. Today, the deficit relative to the economy is about 7%.

Bessent has suggested a combination of spending cuts and growth to stabilize America’s debt.

As a result of Trump’s pick, US Treasury yields slumped following weeks of across-the-board increases in the government bond market. Whether the Trump administration can turn around America’s ailing fiscal health remains to be seen.

One More Issue: Cryptocurrency

The cryptocurrency sector will witness a dramatic overhaul over the next few years. During the current administration, the US government has targeted crypto, with Securities and Exchange Commission Chair Gary Gensler leading the charge. He has called crypto an industry filled with “hucksters” and “fraud.” While Trump initially shared this view, he has had a change of heart.

Now that Gensler is resigning on Inauguration Day, Trump will likely select an ally of the crypto market to serve as SEC chief. Additionally, Trump could have more support for his pro-crypto agenda, such as a national Bitcoin reserve, a crypto presidential advisory council, and a friendlier regulatory climate.

Bessent and Lutnick have been vocal champions for crypto. “I have been excited about the president’s embrace of crypto, and I think it fits very well with the Republican Party; crypto is about freedom, and the crypto economy is here to stay,” Bessent recently said in an interview with Fox Business. Lutnick, meanwhile, believes Bitcoin "should be treated like gold and like oil." In other words, Bitcoin is a commodity, not a security. A regulatory change is coming, but experts agree that Crypto Bros should not anticipate an overhaul overnight.

Hope for America Under Trump 2.0?

Are Americans confident about a Trump second term? A new CBS poll found that 59% of voters approve of Trump's handling of his presidential transition. Forty-one percent of Republicans are optimistic about Trump's second stint at the White House, while just 11% of Democrats hold the same hope. After four years of high inflation, simultaneous geopolitical conflicts, and a broken border system, it is no surprise that President Joe Biden is leaving the Oval Office with his approval rating at its lowest since entering the highest office of the land. The pressure is on for the incoming administration to return consumer sentiment to where it was before January 2021. Can Trump do it?