Trump’s Titans: Why Wall Street’s supremos are risking their reputations to prop up the president

Politicians in liberal democracies need to hear dissenting voices – but Trump is unlikely to get that from the people he has appointed to key economic portfolios, writes James Moore

With Trump 2.0 it really is different, in no small part because the people around him are different. They are either enablers, who are apparently incapable of providing any meaningful pushback of the sort politicians badly need, or true believers.

Last time around, he had people like Steve Mnuchin, who pulled off the remarkable feat for a Trump lieutenant of spending his entire term in post as treasury secretary. There was also Gary Cohn, his chief economics adviser for two years. Alumni of Goldman Sachs, who followed a well-trodden path from the powerful investment bank into public office, they brought an economically orthodox, conservative view with them.

The rest of his first government was full of establishment Republicans who actively worked to moderate – even to undermine – the president’s most destructive instincts.

Today, it is very different.

Trump traded Mnuchin for Scott Bessent, a former hedge fund manager and someone whom Wall Street had hoped would be the moderating influence Mnuchin was.

That hasn’t happened. Bessent’s talk about the US economy needing a “detox period” aligns with the “transition” rhetoric we’ve heard from other members of the administration. This would involve it taking a hit ahead of a mass move of manufacturing back to the US. That’s how the theory goes.

It does not have many supporters on Wall Street, which has had to wake up to the fact that its supposed champion has bought into the Trump agenda – at least in public – despite the damage such punitive tariffs do to the American economy and to the wallets of American consumers.

This helps to explain US markets’ violent lurch into the red as the tariffs have landed. Britain is standing pat when it comes to hitting back with tariffs of its own, although we are told “all options are open”.

The street of dreams has woken up to an economic nightmare. So has the rest of the world.

Cohn’s former role at the head of the National Economic Council is Kevin Hassett, an academic economist and think tanker who previously helped the more traditionally conservative Republican campaigns of the late John McCain and Mitt Romney.

If Hassett is in the running to become chair of the US Federal Reserve, when the incumbent Jerome Powell’s term is up, be very afraid. Powell has asserted his independence and determination to respond to the “net effect” of Trump’s policies in line with his remit. But if the Fed turns enabler, what then?

Over to the commerce department – and Howard Lutnick, a Wall Street veteran who made his name at broker Cantor Fitzgerald. There have been suggestions that Lutnick may be a more moderate voice in private, if not in public. If so, there is scant sign of it.

Unstinting loyalty to the boss has helped Trump trade adviser Peter Navarro become a rare holdover from his first administration. Navarro is a true believer, an instinctive fellow traveller who has long had a hawkish stance on China and views on trade that have raised eyebrows (at least) among other economists. He served a (brief) spell in jail for contempt of Congress after ignoring a subpoena from a House committee investigating the 6 January riots.

Then there is Stephen Miran, the nominee to head the council of economic advisers, who is another economist with some ideas that are considered eccentric at best. Another true believer, he is currently a strategist at the hedge fund Hudson Bay Capital Management.

The upending of the global economic order, in favour of the “dumbest trade war in history” – a now famous quote from the Wall Street Journal – is perhaps more understandable from the economists than the Wall Street vets. You can find all sorts of crazy ideas and theories among practitioners of “the poor science”.

It is more puzzling to see the likes of Lutnick joining the party. But then, when you’ve made your money – dizzying amounts of it – what next? Why not make a little history, even if it is bad history? Is that the motivating factor?

Let’s assume for a moment that the US and/or multinational businesses toe the line and do what Trump wants them to do. It takes time to build new factories and to bring them on stream.

Toymaking giant Lego, for example, has pushed back the start of production at its Virginia plant, on which it broke ground prior to Trump’s election, until 2027 assuming no further glitches.

In the meantime, the US economy – and the US consumer – will bear the costs of the tariffs on the goods they buy.

The “transition period” could thus be a long one, even assuming that it is ultimately successful in bringing manufacturing facilities back to the US. And there is no guarantee that it will be.

Consumers tend not to thank politicians – or political parties – who hit them in the pocket. The US economy was not the only reason for the Democrats’ stunning defeat, but it clearly played an important role, in particular the inflation Joe Biden was never able to contain and (some argued) that he contributed to with his big spending “Inflation Reduction Act”.

If Trump’s critics are right – and the American economy falls into recession, maybe the Dems have more cause for optimism than they really deserve. There doesn’t appear to be anyone in the Republican Party, much less Trump’s cabinet, who is willing to warn him that his political choices will not come without cost.