Donald Trump has been somewhat cagey about his economic and tariff plans since voters elected him president, raising the stakes in a drawn-out contest to become his Treasury secretary while focusing Wall Street’s attention on other key posts.
“Investors are on edge regarding the Trump’s Treasury Secretary pick and what it might signal about the balance of power within the administration on economic policy,” wrote Evercore ISI in a note to clients this week.
Indeed, reactions to the ongoing selection process suggest that markets have plenty of questions about the market-friendliness of Trump’s coming administration, with his Treasury pick set to be taken as a key signal there.
And Tuesday offered at least one clue about the direction with news reports that one of the tariff-friendliest candidates, Cantor Fitzgerald CEO Howard Lutnick, is expected to be announced as the next Commerce secretary.
If nominated and confirmed, Lutnick would have a key role in trade at the Commerce Department, most notably heading up many enforcement efforts as well as likely leading the review process of any tariffs Trump aims to impose.
But a Commerce Department post for Lutnick is notably less prominent than Treasury, a spot that remains up for grabs for now. Trump is expected to meet with additional candidates for that post this week — with the chance of a wild card always a distinct possibility.
Perhaps channeling the market’s desire for some amount of certainty, BTIG director of policy research Isaac Boltansky added in a recent Yahoo Finance Live appearance that “I hope by the end of the week we know who the Treasury secretary nominee is.”
President-elect Donald Trump during an Ultimate Fighting Championship event at Madison Square Garden on Nov. 16 in New York. (Chris Unger/Zuffa LLC) ·Chris Unger via Getty Images
The unease among business leaders is particularly acute around tariffs and comes after Trump talked about those import duties multiple times a day on the campaign trail. He has been quiet on that subject in recent weeks.
The now President-elect appeared last Thursday at a gala in Florida and gave a speech that reprised many campaign promises, from cutting energy prices “in half” and letting Robert F. Kennedy Jr. “go wild” on health issues.
But he notably avoided much in the way of economic policy — and didn’t get into trade issues at all.
But trade in particular is top of mind for businesses. Retailers have already begun to shift their plans as have other businesses, but others have little choice but to wait for signals.
President-elect Donald Trump speaks at the America First Policy Institute Gala held at Mar-a-Lago on November 14 in Palm Beach, Florida. (Joe Raedle/Getty Images) ·Joe Raedle via Getty Images
Any sign from Trump “is going to be incredibly influential…because right now, firms are operating in a bit of a vacuum trying to figure out whether or not he’s still committed to double-digit, across the board tariffs,” said Wendy Edelberg, director of The Hamilton Project at the Brookings Institution, in a recent interview.
During the campaign, Trump promised 60% tariffs on China as well as 10-20% blanket duties on other trading partners as he again and again extolled tariffs as “the most beautiful word in the dictionary.”
Edelberg predicts that any concrete signal as to whether he intends to follow through will lead many businesses to respond “quite quickly and aggressively.”
And other countries are also being left in suspense.
Adam Posen, the president of the Peterson Institute for International Economics, offered up in a recent digital event that “the governments of major economies are making plans to sort of preemptively make offers of various kinds to the Trump administration” — citing increased natural gas purchases as one carrot to offer in return for backing off tariffs.
The question is whether Trump’s eventual team will be receptive. A “number of the people close to the president-elect believe trade deficits are a really big deal,” Posen said, and smaller concessions like energy purchases are unlikely to be satisfying on that front.
What’s unclear is who will be atop Trump’s team at the Treasury department as jockeying for that post continues and other pre-eminent positions remaining unfilled, notably the director of the National Economic Council. That latter position is often described as a president’s top economic adviser.
Trump has also not yet announced a pick for his trade representative, another figure who will be front and center in any tariff conversations.
Trump is expected to meet with two new Treasury candidates — former Federal Reserve governor Kevin Warsh and Apollo Global Management CEO Marc Rowan — in the coming days. (Disclosure: Yahoo Finance is owned by Apollo Global Management).
Two other contenders appear to be Scott Bessent, a former Soros Fund Management investing chief, and Republican Sen. Bill Hagerty of Tennessee.
Then Republican candidate Trump, left, listens as investor Scott Bessent speaks on the economy in Asheville in August. (AP Photo/Matt Kelley) ·ASSOCIATED PRESS
Lutnick had been seen as a top Treasury choice as recently as last week but is now reportedly headed to the Commerce Department instead. He gained considerable attention for pro-tariff comments during the campaign.
“When was America great?” he asked the crowd at Madison Square Garden before the election and before discussing the 1890s as an era before income taxes when “all we had was tariffs” and the economy was “rocking.”
BTIG’s Boltansky said in a recent Yahoo Finance Live appearance that “if we have Bessent as the pick, I think that it’s going to reinforce what many of us, including myself, believe, which is that the market is ultimately going to be a governor on some of Trump’s policy moves.”
A Lutnick pick at Treasury, by contrast, could have signaled more openness to broader tariffs.
The other candidates, he added, fall somewhere in between Bessent and Lutnick, who had been seen as possibly signaling “a more aggressive pushing on the tariff side of the story and perhaps not as much interest in near-term volatility in markets.”
Evercore ISI in its note this week cited Bessent as “the investor favorite” and noted a Bloomberg report that Bessent could be headed to the National Economic Council and said it could calm some market fears if that comes to be.
But the authors were quick to note that there is little sense that uncertainty will go away entirely even once Trump posts his pick on Truth Social.
“Questions will remain over how much influence this person will actually have over an administration in which the President firmly embraces tariffs,” they note.
Ben Werschkul is Washington correspondent for Yahoo Finance.
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