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It started like the French Revolution with a fight whether US has a monarchy …
Congress devised some positions to stay on during changes in administrations.
But Donald Trump has declared his intent to replace at least three.
The mistake Trump isn’t making a second time
The motto of Donald Trump’s transition is another Reagan-era motto: “personnel is policy”. Here’s what to expect from his lieutenants in five key areas: economy, tariffs, immigration, energy and security.
Trump’s nominations are all about loyalty and delivering on big promises.
Donald Trump appropriated Ronald Reagan’s 1980 slogan, “Make America Great Again” back in 2012 and has made it the signature of his movement. Now he’s vigorously adopting a second Reagan-era motto: “Personnel is policy.”
Since November 5, President-elect Trump has not stopped talking about personnel and has wasted no time in filling out his top team. Trump is determined to get the right lieutenants in key jobs, something he regrets not doing during his last stint in the White House. He believes it derailed his agenda.
“I picked some people that I shouldn’t have picked,” Trump told podcaster Joe Rogan. Unlike the first time, the president-elect now understands how Washington works.
“I know them now. I didn’t know any of them then. I relied on other people for recommendations. We had some people that I wouldn’t have used in retrospect,” he told reporters just before Christmas.
Trump has announced 57 nominations requiring senate confirmation, and another 35 that don’t need approvals, including Susie Wiles, who will be the first woman to serve as White House chief of staff.
Wiles is not controversial but many Trump picks are and two have already withdrawn. As for the rest, Trump has warned senators who are “unreasonable” in not confirming nominees that they can expect to face a primary challenge.
Mark Penn, a long-time adviser to president Bill Clinton, says Trump’s nominations are all about loyalty and delivering on big promises.
“Last time Trump appointed a lot of outsiders with great credentials, there were a lot of problems, clashes and then firings. This time those who really went out on a limb for him are getting a chance to show what they can do if given real responsibility,” Penn says.
“They may have fewer credentials, but they all were willing to buck the establishment publicly.”
There are many promises Trump wants to keep, such as upending the health and education systems – for which he has nominated outliers Robert F Kennedy jnr and wrestling executive Linda McMahon to handle.
He has appointed billionaire Elon Musk and biotech entrepreneur Vivek Ramaswamy to lead a government efficiency effort to save $US2 trillion ($3.22 trillion).
And he has nominated Paul Atkins, to lead the Securities and Exchange Commission, and billionaire David Sacks to clear the regulatory framework for cryptocurrencies, which have soared since the November 5 election.
But there are five key areas that Trump has to get right to ensure his brand of MAGA politics lives on: the economy, tariffs, immigration, energy and security. He needs strong lieutenants to deliver on big tax cuts, negotiate tariffs, control the border, ramp up energy production and end military conflict.
Economy
Scott Bessent is a former hedge fund manager, Democratic donor and protege of liberal billionaire George Soros. Bloomberg
The conductor of the economic orchestra is the US Treasury Secretary and Trump has nominated Scott Bessent, a former hedge fund manager who worked with billionaire Democratic donor George Soros.
The first openly gay person in the role, Bessent’s challenge will be managing the inevitable fiscal expansion under Trump, including in two years time, raising or abolishing the debt ceiling – a cap on the total amount of money that the United States is authorised to borrow – which could add to inflation concerns.
Trump says getting rid of the debt ceiling would be the “smartest thing it [Congress] could do. I would support that entirely.”
But abolishing the ceiling would be a shock move for Bessent and for many Republican spending hawks who oppose raising the ceiling on principle.
US government debt surpassed $US36 trillion in October or about 123 per cent of GDP. Net interest payments will hit more than $US1 trillion next year.
The US budget deficit is projected to reach $US2 trillion this fiscal year, marking the third straight year of deficits in excess of 6 per cent of GDP and growing to $US2.8 trillion by 2034.
Bessent, 62, wants to halve the deficit to 3 per cent of GDP by 2028, with a recipe of further tax cuts alongside spending restraint, deregulation and cheap energy.
“I am alarmed by the size of these deficits,” Bessent said at a Manhattan Institute event in June. If Bessent can’t get that huge deficit under control, there might be a shock sell-off in bonds.
Trump’s vice president, J.D. Vance, raised concerns this year that some investors might “try to take down the Trump presidency by spiking bond rates”.
In 2022, the UK government saw the cost of its debt spike after its proposed tax cuts prompted a destabilising selloff in UK government bonds.
Trump wants to extend the record 2017 tax cuts and cut the company tax rate to 15 per cent from 21 per cent. He expects some of this will be funded by raising money from tariffs and cutting renewable energy subsidies. But there might be a gap in funding tax cuts. That’s where Bessent’s job gets difficult.
Former Treasury secretary Larry Summers says reliance on tariff revenue to fund tax cuts would be ridiculous, and it would be if not for the aforementioned sources of funding. Bessent has frequently backed Trump on tariffs as a tool to even up unfair trade saying: “The reflexive opposition to tariffs represents political ideology and advocacy, not considered economic thought.”
Tariffs
Jamieson Greer is a lawyer, Trump trade official, Air Force lawyer. Reuters
Trump’s pick for raising tariff revenue is Jamieson Greer, a 42-year-old acolyte of the president-elect’s former trade representative Robert Lighthizer.
Greer, a former Air Force lawyer turned trade litigator, was chosen chiefly for his loyalty and ability to carry out Trump’s orders like a foot soldier.
Greer thinks Beijing’s trade practices should be met with a similar response to the way the world has sanctioned Russia after its invasion of Ukraine.
He says Western states must first decide on whether they agree that China – as governed by the Chinese Communist Party – is a “threat to liberal values and democracy”.
Greer argues that China has expanded its “industrial territory” at the expense of other countries in a way that was not moral.
“The Trump administration’s response to these malign activities was to impose costs on the Chinese Communist Party: by implementing tariffs that make subsidised Chinese goods more expensive to import; by enforcing laws that prohibit trade in goods made by forced labour; by strengthening scrutiny of Chinese investment in critical technology, critical infrastructure, and data-driven companies.”
Greer will be watched closely. Trump has also appointed former trade adviser, China hawk and close friend Peter Navarro, who has recently repeated the motto “personnel is policy”.
Deutsche Bank economists expect a 10 per cent increase in the tariff rate on imports from China in the first half of next year, ratcheting up a further 10 per cent in the second half. They predict US inflation will be 2.6 per cent, rather than the forecast 2.3 per cent. US inflation currently sits at 2.7 per cent.
If the tension gets ugly, the economists estimate a 40 per cent cumulative rise in tariffs on imports from China and a 10 per cent universal baseline tariff. That would see US core personal consumption expenditure ending 2026 nearer to 3.5 per cent up from 2.4 per cent currently. So while not disastrous for inflation, it’s enough to have the Federal Reserve needing to cut rates.
But the Fed has recently eased back on how aggressively it says it will cut. Trump won’t like this. In his first term, he criticised Fed boss, Jerome Powell, for not cutting. He will likely do the same, but he has recently confirmed that he would not remove Jerome Powell as chairman.
Deutsche Bank’s Jim Reid says the Fed would guide interest rate policy back towards a neutral rate of 3.75 to 4 per cent over 2026 and 2027, from the current 4.25 per cent to 4.5 per cent range, as negative growth effects from tariffs “become a headwind for private domestic demand and allow some modest reductions over time”.
The risks of higher inflation, Reid says, come from a more aggressive approach to trade but also on immigration. He says if there is a “light touch immigration” policy implemented, inflation increases would be more measured.
Immigration
Tom Homan is a former Trump immigration official, police officer and US Border Patrol agent. Bloomberg
Trump’s nomination for “border tsar” is the hardliner former police officer and US Border Patrol agent Tom Homan. He was Trump’s former acting head of Immigration and Customs Enforcement.
He doesn’t need senate confirmation, and he doesn’t mince his words promising that he “will run the biggest deportation operation this country’s ever seen”.
“Homan will be in charge of all Deportation of Illegal Aliens back to their Country of Origin [sic],” Trump wrote when announcing his pick. Trump also appointed prominent immigration hardliner Stephen Miller as White House deputy chief of staff.
If Homan and Miller deliver on the promise of deporting anywhere between 5 million to 15 million people, there could be a significant reduction in low-income workers. The inflation effect is unclear because higher immigration has led to significant spending, which can push up inflation.
A Brookings report says Trump’s proposed immigration policies could cause GDP growth in 2025 to be roughly half a percentage point – or $US130 billion – lower which can mean less spending and lower inflation.
But Deutsche Bank thinks lower immigration would mean higher inflation. Its economists estimated that higher net immigration reduced core personal consumption expenditure inflation in 2023 by 25 to 50 basis points.
“A reversal of these immigration flows would therefore produce an adverse supply shock that would unwind this disinflationary impulse.”
It’s a puzzle and a promise that Bessent and Trump must manage.
Energy
Chris Wright is chief executive of Liberty Energy, a hydraulic fracturing company based in Denver. AP
The wild card on inflation could be energy. Energy is one of Trump’s biggest promises. He’s promised to slash electricity costs by half in the first year and “drill, baby, drill”.
“Starting on day one, I will approve new drilling, new pipelines, new refiners, new power plants, new reactors, and we will slash the red tape,” Trump said in September.
Trump nominated energy services entrepreneur Chris Wright to be energy secretary and tapped former congressman Lee Zeldin as his chief of the Environmental Protection Agency.
Wright helped launch the American shale revolution, which sharply reduced the country’s dependence on oil and gas imports. He has spoken about the need to diversify energy in everything from battery technologies to small modular nuclear reactors. He sits on the board of Oklo, a nuclear reactor company backed by OpenAI chief executive Sam Altman.
While the US is already the world’s largest crude oil producer, the country is forecast to have rising energy demand driven by factors such as data centre expansion. The Department of Energy expects data centres will triple energy consumption to 12 per cent of total US electricity by 2028.
ASX-listed Brookside Energy, which plans to increase its oil and gas inventory in Oklahoma, has already identified new drilling locations and dealt with Wright on some of its first projects.
Brookside managing director David Prentice tells AFR Weekend that Wright is a good choice not just for expanding supply but also for getting the messaging right.
“For what it’s worth, I think Chris Wright’s selection as energy secretary is an excellent choice,” Prentice says. “I think his commentary on the energy challenges we face, and the role of the oil and gas industries to help meet those challenges is important and needs to find a wide audience.”
Some producers say expanding production any more will push prices down and knock out producers. Adam Ferrari, CEO of Phoenix Capital, says his company could only make a profit if oil prices traded at $US25 a barrel and that “if prices got any lower, we would stop producing oil.”
Security
Mike Waltz is a former congressman, Green Beret, recipient of four Bronze Stars.
Energy and critical minerals are regarded as national security and national security has become a far more powerful tool in arguing for Trump’s economic policies.
The president-elect has appointed congressman and China hawk Mike Waltz as national security adviser.
Waltz’s mission will be to identify how America can become more self-reliant in the production of new technologies, which now dominate defence capability.
He backs the AUKUS defence pact, as does Trump’s secretary of state pick, Marco Rubio. Together with his defence secretary pick, former Fox News host Pete Hegseth, and billionaire financier Stephen Feinberg, as deputy defence secretary, this collection of personnel will be responsible for brokering Trump’s big promise of ending the war in Ukraine.
“Before I even arrive at the Oval Office, shortly after we win the presidency,” Trump has said, “I will have the horrible war between Russia and Ukraine settled.”
Starting trade wars, ending military wars and toughening up America’s borders are the key operating theatres for Trump’s lieutenants over the next four years. There are big promises. And they will need big, loyal personalities to deliver them.
