A calculated risk: who Trump's economic ministers will turn out to be
Before the US presidential election, Donald Trump promised a major restructuring of the entire economy of the country - and the global economy at the same time. The plans for innovation, which he is still pursuing, include lower taxes, simplified work with cryptocurrencies and the creation of a national bitcoin reserve, as well as import duties for all foreign suppliers, including not only China and the EU, but also neighbors from Canada and Mexico. Nevertheless, the president's emerging team does not yet give the impression of being prone to drastic action. Read more about the nominees for key economic positions in the new US administration in Izvestia.
Finance Ministry: Scott Bessent
Perhaps the main economic post in the administration will take (if approved by the Senate, which, however, there is little doubt) 62-year-old Scott Bessent, an experienced hedge fund manager. Bessent has not participated in the political life of the United States until now and was not known to the general public. This, however, is quite in the style of Trump, who prefers to nominate to many positions people from the business and financial sector whom he knows well personally. People who have worked with Bessent testify to his interest and deep knowledge of the global economy.
Bessent became an active Trump supporter only this year: in previous years, he used to be a donor to the Democratic Party. Moreover, he worked under the leadership of liberal billionaire George Soros, although this in itself does not yet tell us anything. Bessent himself cites the Biden administration's economic policies, which have led to the worst spike in US inflation in 40 years, including bloated budget spending, as the reason for switching to Trump's agenda. He is also unhappy with the over-regulation that has become the norm in recent years.
Key Square Group founder Scott Bessent speaks at a campaign event for Republican presidential candidate and former U.S. President Donald Trump in Asheville, North Carolina, U.S., August 14, 2024
In a nutshell, Bessent proposes Trump' s "Three C's" policy . It involves reducing the budget deficit to 3% of GDP (instead of the current 6%) by 2028, achieving economic growth rates of up to 3% per year, and increasing oil production by 3 million barrels per day. All this is to be achieved through deregulation and other pro-growth measures.
The name of the plan was inspired by the "three arrows" program of Japanese Prime Minister Shinzo Abe, who was assassinated the year before last by a terrorist. Abe, by the way, was one of those foreign rulers who could boast of a friendship with Donald Trump.
But the epic cryptocurrency projects proposed by many of the old new president's associates may run into problems - Bessent is apparently not a bitcoin fan. Not least because of this, the rate of the digital currency experienced a strong correction after the announcement of the nominee, without reaching the $100 thousand mark. However, this may be due to banal profit taking at a time when the large-scale post-election rally of the "crypto" banally exhausted. In any case, but many supporters of cryptocurrencies, including Ilon Musk, supported another candidate for this position - Howard Lutnick.
Department of Commerce: Howard Lutnick
...who ended up heading the second most important economic agency, the Department of Commerce. The department's mission is to secure the interests of companies abroad, implement trade and economic policy, and generally regulate the country's economy. Unlike Bessent, Lutnick is a crypto-enthusiast. In general, he has been a longtime Trump supporter, sharing the main views of his likely future boss.
In particular, he considers tax cuts a great thing, citing the experience of the US in the early 20th century, when the country knew no direct taxation at all, forming the budget at the expense of foreign trade duties. In addition, he has repeatedly spoken out sharply against the transfer of American industries to other countries, considering it "the delusion of the elite from the coasts."
Howard Lutnick, chairman and CEO of Cantor Fitzgerald, speaks during a rally in support of Republican presidential candidate and former U.S. President Donald Trump at Madison Square Garden in New York, U.S., October 27, 2024
For now, the question remains as to how Lutes and Trump will pursue the industrial policies that the current administration has promoted. For example, the Chip and Science Act, which provided funds to the country's high-tech industry - primarily semiconductor manufacturing. On the one hand, Republicans are not big fans of funding industry out of the budget pocket, and spending needs to be cut. On the other hand, in the conditions of trade war and de-globalization, support of the national manufacturer in one form or another is a non-alternative measure. Especially if we are talking about a strategically important industry that has fallen behind its competitors from East Asia.
Just before the end of this week, the most promising candidate for at least one of the two positions was former U.S. Trade Representative Robert Lighthizer. The press and expert community were quite surprised by the fact that he has been left without a portfolio so far. It was Lighthizer who was the most ardent adherent of the high duty policy, and he would have been the most logical choice to implement it.
If Lutnick doesn't differ too significantly from Lighthizer in his views on trade, Bessent represents something else: the classic image of a Republican - a fiscal conservative disinclined to take drastic steps in economic policy. He made some pretty interesting statements before the election, saying that the threat of tough tariffs was essentially a negotiating strategy, or "escalation for de-escalation's sake." In order to get favorable terms in negotiations, the counterparty must be properly intimidated (a common thing in big business, as opposed to big international politics, where one must be polite).
U.S. Trade Negotiations Representative Robert Lighthizer before the start of another round of talks between the U.S. and Chinese delegations, May 10, 2019
In this regard, the news that the U.S. is ready to impose duties of 25% on all products from Canada and Mexico (with which the Americans form the NAFTA free trade zone) should rather be interpreted in this way. The position of the Canadian government of unpopular Prime Minister Justin Trudeau is already very weak, and the imposition of duties will crush the national economy, which has few alternatives (now the trade turnover with the U.S. is $900 billion). Canada is clearly ready to make concessions on a wide range of issues. As for Mexico, it is primarily required to cooperate in controlling the migration flow from third countries to the United States. It is unlikely that the Americans are going to seriously impose harsh tariffs against a country that has replaced Chinese suppliers to America on a very wide range of trade items.
Securities and Exchange Commission: unknown
The Securities and Exchange Commission, which is the main regulator of the entire US financial market, is another crucial position whose head is yet to be chosen. The list of candidates here is quite extensive, with the main ones being people who have or have had something to do with the cryptocurrency world. For example, there's Hester Pearce, who earned the nickname "cryptomama" for her desire to legalize cryptocurrency and regulate it as little as possible. Another option is the former head of crypto exchange Binance, Brian Brooks.
These people will replace in the position of Gary Gensler, who is distinguished by a very skeptical attitude to "crypto": he has long slowed down the introduction of bitcoin exchange-traded funds. In almost any case, the current restrictions will be relaxed, the only question is by how much. For fans of cryptocurrencies in America now comes a good time, even if the plan to turn bitcoin into the main reserve currency for the U.S. Federal Reserve will never be realized because of the position of Scott Bessent.
Overall, Trump's appointments in the economic sphere are not as radical as in other areas. Which is quite expected: the economy was the main reason why the billionaire was elected president again. Risky steps in this area, if there are any, will be clearly calibrated. There will definitely be no ill-considered experiments in the financial and economic block.
