Trump builds economic team focused on tariffs, tax cuts and energy

Donald Trump has given somewhat contradictory clues in the selection of the top officials of his economic team. The U.S. president-elect, however, has firmly outlined three main priorities for his administration as he prepares to take office on January 20. His economic program is defined by tariffs on imports — whether as punishment or as a negotiation tool — ; broad tax cuts; and promoting fossil fuel production. While the perspectives of his appointees vary, their decision-making autonomy is expected to be limited. Trump will inherit a robust economy, but from the outset he is intent on distinguishing his policies from those of his predecessor, Joe Biden.

The key figures on Trump’s economic team include Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, energy tsar Doug Burgum, Trade Representative Jamieson Greer, White House National Economic Council Director Kevin Hassett, and Office of Management and Budget Director Russell Vought. Additionally, Elon Musk and Vivek Ramaswamy, operating outside the Cabinet, will lead the self-proclaimed — though currently nonexistent — Department of Government Efficiency. Even without the full slate of secretaries for Energy, Labor, Transportation, Housing, and Agriculture, the differing approaches among Trump’s primary economic policymakers already highlight significant contradictions.

Wall Street took note when billionaire Scott Bessent, founder of Key Square Group, was announced as Treasury Secretary late Friday. A respected figure in financial circles, Bessent’s appointment briefly reassured investors, signaling the possibility of an orthodox economic approach centered on deficit control and economic growth. This hinted at tax cuts that would be implemented more strategically and tariffs that would serve as negotiation levers.

Bessent encapsulates his economic vision with the formula “3/3/3″: reducing the federal deficit — which currently hovers around 7% — to 3% of GDP, achieving annual economic growth of 3%, and increasing national oil production by three million barrels per day. Investors welcomed his appointment with a temporary decline in Treasury debt interest rates and a dip in the dollar’s value.

That relief, however, proved short-lived. On Monday, the president-elect reignited uncertainty in the currency market by threatening unilateral tariffs of 25% on all products imported from Mexico and Canada — currently exempt under the existing free trade agreement — and an additional 10% on top of the already-established tariffs on Chinese goods. Yet Trump’s rhetoric was tempered somewhat by what he called his “wonderful” conversation on Wednesday with Mexico’s president, Claudia Sheinbaum, leaving the effectiveness of his tariff threats uncertain.

Interest rates on government debt also rose following the appointment of Hassett, a key architect of the tax cuts during Trump’s first term. Compounding this are the protectionist policies championed by Lutnick, the new Commerce Secretary, and the appointment of Greer as Trade Representative — a figure instrumental in shaping Trump’s earlier tariff policies.

These developments complicate Bessent’s task of implementing a fiscally responsible policy as Treasury Secretary, effectively making it a near-impossible balancing act. The bold spending cuts promised by the Department of Government Efficiency have been described as “pretty easy” by Maye Musk, Elon Musk’s mother, during a Fox News interview. However, few see it that way. Elon Musk himself has suggested that $2 trillion could be cut from the federal government’s $6.7 trillion budget but has offered few concrete strategies, beyond striking but limited examples.

The largest federal expenditures — mandatory debt interest payments, military spending (which Trump has pledged to increase), and entitlement programs like Social Security and healthcare (which the president-elect has promised to preserve) — present significant barriers to achieving such cuts.

According to the International Monetary Fund, Trump’s proposed mass deportations and nearly indiscriminate tariffs are expected to negatively impact both economic growth and inflation. Rising prices due to supply restrictions could slow down the Federal Reserve’s interest rate cuts, making it more difficult to service the debt. While tax cuts might stimulate economic growth, they would likely exacerbate the federal deficit and debt, increasing the overall interest burden.

The division of powers within Trump’s economic team also remains unclear. While his appointments have outlined specific responsibilities, overlaps and gaps persist. For instance, the announcement of Scott Bessent as Treasury Secretary emphasized the dollar’s role as a reserve currency, the need to curb unsustainable federal debt, promote competitiveness, and prioritize growth. However, there was little mention of taxation or tariffs, aside from a fleeting reference to “unfair trade imbalances.”

In contrast, Trump’s statement on Lutnick’s appointment as Commerce Secretary explicitly referred to trade policy: “He will lead our Tariff and Trade agenda, with additional direct responsibility for the Office of the United States Trade Representative.” The trade representative, Greer, will report directly to Lutnick.

Trump has also surrounded himself with familiar allies in the White House, retaining two figures from his previous term. Russell Vought, whom Trump calls “an aggressive cost-cutter and deregulator,” will reprise his role as Director of the Office of Management and Budget. Vought is closely associated with Project 2025, the conservative movement’s flagship policy agenda. Meanwhile, Kevin Hassett, reappointed as Director of the White House National Economic Council, will work alongside Trump to advance key economic policies. In announcing Hassett’s return, Trump said: “Together, we will renew and improve our record Tax Cuts, and ensure that we have Fair Trade with Countries that have taken advantage of the United States in the past.”

Regardless of whether tax cuts — subject to Congressional approval — or trade policies turn out to be more or less aggressive, there is little doubt that Trump will prioritize fossil fuel production over environmental concerns. Energy tsar Doug Burgum will serve as his key liaison with the oil industry, and the president-elect’s policy on the matter is very clear: “Drill, drill, drill.”

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