President-elect Donald Trump caught many by surprise this week when he announced plans to install far-reaching tariffs of 25% on Mexico and Canada and increase existing tariffs on goods imported from China by an additional 10% on his first day in office. During the campaign, “tariff man” had promised to enact such broad-based tariffs to increase federal revenues and punish countries for taking advantage of the U.S. through trade.
Even if these are mere negotiating tactics, with a U.S. economy at full employment and strong growth, no one knows exactly what is driving these slapdowns on trading partners and what goals Trump hopes to achieve. This will surely be the role of his new cabinet members as they join Trump in navigating the already historically strong economy being handed to him.
Trump has designed most of his choices for his management committee and cabinet, but they vary in skill, experience, and temperament. Which of these lieutenants hold primary influence with Trump will determine whether he builds on the great economic momentum handed to him or squanders it. We have classified these players into three groups: the Fortifiers (the good), the Detractors (the bad), and the Unknowns (mercurial influencers who might do good or harm).
For now, the “Trump bump” has been real as investors hope—perhaps naively—that the benefits of deregulation and lower taxes will outweigh the costs of an expanded tariff policy, immigration crackdowns, and higher federal deficits.
Whether those economic benefits exceed the economic costs will be determined by those within the Trump cabinet and senior leadership team who can manage the president-elect’s evolving priorities, maintain his respect, and avoid his wrath. Under no other president has the competition for influence been more determinant of success, considering the cast of characters being nominated to implement the Trump economic agenda.
For administrative officials with direct oversight of businesses and markets, such as the secretaries of Treasury and Commerce, technical expertise, management experience, existing relationships, and stakeholder confidence will be critical attributes. For those with more indirect influence, such as the secretaries of State and Defense, assuring CEOs, investors, and consumers that their actions, and Trump’s meddling in their respective spheres, will not have negative effects on the economy is of considerable importance.
The ‘fortifiers’
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The recent nomination of Scott Bessent for Treasury Secretary has been warmly received by CEOs and the investment community. We have spoken to many business leaders who believe Bessent will be a strong and constructive voice of reason within the Trump administration, willing to bridge ideological divides and conflicting priorities across sectors.
Bessent brings four decades of experience working with legendary investors, such as George Soros, Jim Chanos, and Jim Rogers, in addition to founding and leading his own successful hedge fund. He possesses a deep understanding of financial market operations, currency movements, and market history. Bessent also has strong relationships with domestic and international financiers.
Most importantly, Bessent appreciates the positive and negative effects of tariffs on the U.S. economy. While the nominee has supported Trump’s tariff regime, he has also recommended they be “layered in gradually, so the (one-time) price adjustment would (occur) over a period of time.” Whether or not tariffs are used strategically, he does recognize that they are a means “for achieving the president’s foreign policy objectives” but not the end.
Governor Doug Burgum and Chris Wright have been tapped to head the Departments of the Interior and Energy, respectively. But of more interest is their assignment from Trump to lead a new national energy council. The council will be responsible for “cutting red tape, enhancing private sector investments…and by focusing on INNOVATION over…regulation” in the U.S. energy industry, including the electric grid which severely needs to be upgraded and expanded.
Both men have had successful careers in the private sector and are expected to bring the same pragmatism and savviness to their new roles. Burgum, who will chair the energy council, most recently served as the governor of North Dakota and has demonstrated an ability to unify and lead across political ideologies. Burgum and Wright will ensure the U.S. energy security and dominance of the Biden administration continues under Trump.
Trump’s selection of Senator Marco Rubio for Secretary of State grants confidence to CEOs and investors who were anxious to learn what the president-elect’s “America First” policy would mean for international engagement and global trade. Senator Rubio represents a steady hand, bringing over a decade of experience in foreign relations, not to mention navigating the politics of Capitol Hill. He is currently the vice chairman of the Senate Select Committee on Intelligence and a member of the Committee on Foreign Relations.
A noted foreign policy hawk, especially when it comes to China, Rubio recognizes the ever-expanding military and economic threats from the new axis of evil: China, Iran, North Korea, and Russia. He has been supportive of Ukraine but, like many others, now believes the U.S. is “funding a stalemate.” The senator embraces Trump’s policy of peace through strength, which professes that a firm stance against adversaries will reduce the need for foreign engagement.
The nominee for Labor Secretary, Lori Chavez-DeRemer, is a former congresswoman from a swing district in Oregon who lost her 2024 race in a close election, despite union endorsements from the ironworkers, firefighters, and local Teamsters. In Congress, Chavez-DeRemer was among the few Republicans who have supported major pro-union legislation. She is viewed as a moderate voice within her party and will continue to serve as a moderating voice for a president who tends to favor business interests.
Representative Elise Stefanik has been nominated to serve as U.S. Ambassador to the United Nations. Expected to easily receive Senate confirmation, Stefanik is the highest-ranking Republican woman in the House and has proven to be an adept politician since taking office in 2014. A member of the House Armed Services Committee and the House Permanent Select Committee on Intelligence, she is a strong defender of Israel, has been critical of the UN for what she believes to be insufficient support to Israel, and took an active role in congressional hearings over antisemitism on college campuses. Stefanik has been one of Trump’s most loyal allies since his first term and will be a key resource for managing diplomatic relations as he enacts tariffs on friends and enemies alike while pushing for peace in the Middle East.
The speed at which Trump has formed his cabinet and administration is breathtaking. Nomination announcements continue to roll out at a near-daily pace. Kevin Hassett and Jamieson Greer were recently selected to serve as the director of the National Economic Council and U.S. Trade Representative, respectively. Each is a familiar name from the first Trump administration—Hassett as chair of the Council of Economic Advisors and Greer as chief of staff to then-U.S. Trade Representative Robert Lighthizer—and both bring a degree of pragmatism and experience that business leaders and investors will find reassuring.
The ‘detractors’
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The boisterous, bellicose Howard Lutnick was asked to be Secretary of Commerce as a sort of preemptive consolation prize after a bout of dramatic infighting for Treasury Secretary. Lutnick, who is co-leading Trump’s transition committee, has already been a sore spot for the incoming administration, recently cited as “[getting] on Mr. Trump’s nerves.”
Many watchdogs are already questioning the transition chief’s decision to fill thousands of roles with individuals who will engage with at least one of his three sprawling enterprises—Cantor Fitzgerald, BGC Group, and Newmark Group—and as he divests himself of those same business interests. Of particular interest are his business ties to Tether, a stablecoin producer, which is under investigation by the Treasury and Justice Departments for sanction and anti-money-laundering rule violations.
As successful as Lutnick may be, Trump provides little leeway to those who distract him and his team, particularly for a cabinet position that will be responsible for many of the president-elect’s priorities, including the new tariff regime, trade protections for national security interests, and oversight of the remaining CHIPS & Science Act funds. Moreover, CEOs also want a leader in Commerce who will represent the best interests of U.S. business and not be totally subservient to Trump when the president-elect attempts to pit competitors against each other, as he did with General Motors and Ford, Pfizer, and Merck, and many others during his first term.
Similarly, the nominee for Secretary of Defense, Pete Hegseth, will not only oversee a department of nearly 3 million military and civilian service members but also direct defense spending and contracting with iconic and emergent U.S. defense contractors, such as Boeing, RTX, Palantir, and Kyndryl. As Trump did with the auto industry, he also tried to play defense companies off each other during his first term.
Aside from concerning sexual assault allegations, which he denies, as well as misogynistic and Islamophobic comments, Hegseth does not have significant management experience or (high-ranking) military expertise—critical assets for someone who must forcefully, but respectfully, push back against the president-elect when he uses destructive divide and conquer tactics. Instead, Hegseth was chosen for his ideological alignment and expected passivity when it comes to enacting Trump’s will.
Even the Wall Street Journal’s Editorial Board has written not one but two opinion columns questioning the wisdom in the nomination of Hegseth, commenting: “Yet [Hegseth’s] never run a big institution, much less one of the largest and most hidebound on the planet. He has no experience in government outside the military, and no small risk is that the bureaucracy will eat him alive…The military isn’t Mr. Trump’s enemy, and a purge mentality will court political trouble and demoralize the ranks.” The Editorial Board goes even further in a second column saying that “nominations impulsively made can also be withdrawn.”
Tom Homan, the appointed border czar, with support from Governor Kristi Noem, the nominee to head the Department of Homeland Security, has vowed to orchestrate a “sweeping crackdown on illegal immigration.” Homan displays the sort of belligerence that attracts Trump, but a big question is how far the border czar will go to carry out his mandate. His rigidity and bravado would be destructive to the agriculture, construction, and industrial sectors which rely on hard-working, productive immigrants.
For example, only 30% of farm workers are U.S.-born and over 40% have no work authorization. More than 20% of the 1.6 million construction workers are foreign-born and, in some cities, 40% of those are undocumented. Not to mention immigrants have founded more than half of American tech companies, with over 25% of the American tech workforce being immigrants.
The former acting chief of Immigration and Customs Enforcement during the first Trump administration has already made very provocative threats, such as promising to cut off federal funding to states or cities and jailing government officials for not complying with his deportation mandate. An overly zealous border czar may soon find himself to be the target of influential CEOs, many of whom rely on a trusted and sensible immigration system to attract hardworking blue- and white-collar talent.
Arguably the most ridiculed nominee is Robert F. Kennedy Jr., the chosen successor to the Department of Health and Human Services. Kennedy has caught the attention of the general public and has been a cause for concern among health experts for his many outlandish claims from questioning the effectiveness of vaccines to suggesting man-made chemicals could make children gay or transgender to pausing drug development and infectious disease research to associating IQ loss with fluoride in drinking water to eliminating federal departments central to the U.S. health system. His skepticism towards vaccines—claiming that “no vaccine that is safe and effective”—and drug development could threaten the dominance of the U.S. pharmaceutical industry which is powered by its unparalleled research and development apparatus and supplemented by federal support. In fact, the domestic pharmaceutical industry, valued at more than $1 trillion, represents over 45% of global sales and employs 1.3 million people.
Trump has selected former Democratic Representative Tulsi Gabbard as his nominee for the Director of National Intelligence. The selection of Gabbard has been highly scrutinized due to her unusual association with dictators. In 2017, she made a controversial visit to meet Syrian President Bashar Al-Assad even after U.S. intelligence found clear evidence that chemical weapons were used to kill dozens of people, explicitly refusing to believe the same intelligence community she has been selected to lead.
Gabbard has also defended Russia’s invasion of Ukraine and espoused the same false claims—that there are U.S. biological warfare labs at the Ukrainian border—used by Putin to justify his actions. In defending Putin, she is implicitly excusing the dictator’s recent cyberattacks on American energy infrastructure. With threats of purging the “whole network of rogue intelligence and law enforcement agents working at the highest levels of our government,” the attention surely to be drawn by the former congresswoman is reminiscent of the sort of distraction that constantly paralyzed the first Trump administration.
The ‘unknown’
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Elon Musk, the world’s richest man, has captured the president-elect’s interest and placed himself at the center of nearly every consequential decision for the incoming administration. The talented entrepreneur has been tasked with making the federal government more efficient. Musk will tap into his unique ability to improve operations that have so often stumped others.
Many hope the tech titan will once again deliver on the impossible, this time in direct support of public interests, while willfully ignoring the numerous opportunities that the billionaire will have to engage in self-dealing. The success of Musk’s many startups has been significantly supported by government subsidies and federal contracts. For instance, his space company, SpaceX, earns nearly $20 billion of revenues from federal contracts and has unsuccessfully attempted to secure satellite-based broadband subsidies from the Federal Communication Committee. And his competitors in the electric vehicle and space exploration industries are now in the middle of using those same government programs to scale their ventures.
Questions surrounding Musk’s business interests in China also introduce additional complexities. More than 20% of Tesla’s revenues came from China in 2023. President Xi Jinping has provided the electric vehicle maker with favorable loan terms by Chinese state-owned banks, access to corporate tax incentives, and market access rarely received by foreign companies. Shanghai is also home to the Tesla factory with the greatest manufacturing capacity.
Whether Musk uses his newfound power to undercut competitors and support his business interests remains to be seen. Both U.S. taxpayers and foreign leaders will be closely monitoring every move.
The nomination of Brendan Carr to chair the Federal Communications Commission presents a wild card for companies in the telecommunications industry. Currently one of the existing five members to the commission, Carr has been an advocate for expanding the purview of the regulator’s authority. To the satisfaction of many, he has vowed to hold social media companies responsible for what is posted on their platforms, as interpreted by Section 230 of the Communication Act, going so far as saying: “The FCC should issue an order that interprets Section 230 in a way that eliminates the expansive, non-textual immunities that courts have read into the statute.” But it is where those words were written—Project 2025—that concerns many CEOs and the public.
Carr has also called for the dismantling the “censorship cartel” of Big Tech. Perhaps agreeable when very narrowly defined, the commissioner does not interpret his comments in such a way. Big Tech, while not perfect, provides a significant competitive advantage in America’s ongoing information and technology battle with China. Furthermore, he has also expressed support for Trump’s aspirations of punishing television networks that exhibit political bias. The benefit or harm Carr may bring will largely be determined by the powers the president-elect chooses to extend to the FCC.
While the chairs of the Securities and Exchange Commission, Council of Economic Advisors, and Federal Trade Commission are yet to be filled, the leading candidates are expected to be familiar names, such as Casey Mulligan, the chief economist for the Council of Economic Advisors, and Melissa Holyoak and Andrew Ferguson, both sitting Republican FTC Commissioners. Another highly anticipated nomination for Trump donors is the head of the Commodity Futures Trading Commission, which is expected to oversee the $3 trillion digital asset market.
Judging by the first month of the transition, the success of the Trump 2.0 economic agenda will be determined by who wins the contest for the president-elect’s attention. Will it be the fortifiers who serve as a moderating force to Trump’s bravado? Or will it be the detractors who promise to bring the chaos of Trump’s first term? And will the unknowns tip the scale in favor of one group or the other?
President Ronald Reagan once quipped, “I’ve left orders to be awakened at any time in case of a national emergency, even if I’m in a cabinet meeting.” Perhaps, we can at least be assured that Trump cabinet meetings would not be conducive to America’s next octogenarian president taking a post-lunch snooze.
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