LIGHTHIZER SNUBBED: Donald Trump has nominated hedge fund manager Scott Bessent as Treasury secretary, dealing a blow to protectionist forces in Washington who favored his former trade chief, Robert Lighthizer, for the top economic role. The founder of the Key Square Group investment firm was hailed by Trump as “one of the most brilliant men on Wall Street” and a “widely respected” investor and economic strategist. Bessent, if confirmed by the Senate, would be one of several Wall Street billionaires lining Trump’s Cabinet. He’d be keenly focused on preventing disruptions to financial markets or the broader economy while implementing the president-elect’s agenda. Trump’s choice of a seasoned financier could alleviate some economists’ fears over his tariff plan backfiring on the U.S. — much like then-President Herbert Hoover’s decision to sign the Smoot-Hawley Tariff Act of 1930, which led to retaliation and the failure of overseas banks. As a Yale University graduate who also taught there as a professor of economic history, Bessent “understands the impact of Smoot–Hawley tariffs in terms of aggravating the Great Depression. He would not be in favor of all tariffs all the time, the way Trump says,” Jeffrey Sonnenfeld, president of the Yale Chief Executive Leadership Institute and an informal advisor to five U.S. presidents, told Morning Trade. That could mean rejecting the most aggressive promises Trump made on the campaign trail out right — like imposing universal tariffs of 20 percent and swapping the income tax with tariffs — and pursuing more targeted (or strategic) tariffs aimed at select sectors and foreign adversaries like China. The Treasury announcement comes on the heels of Trump’s decision to tap Wall Street CEO Howard Lutnick as Commerce secretary, whom Trump has suggested will oversee the Office of the U.S. Trade Representative. (That's a move that would require Congress' buy-in, and it’s not clear whether Trump will actually end up demoting his yet-to-be-named USTR.) Still, Trump’s picks to lead Commerce and Treasury are poised to aggravate hardcore protectionists, who have warned against Cabinet picks that hew close to Wall Street. Those decisions are leaving trade policy watchers wondering what role, if any, Lighthizer will play in trade and economic policy for the next Trump administration. “Robert Emmet Lighthizer NEEDS to be Treasury secretary. Why is he not in the publicly disclosed mix? He is the BEST choice by far!” wrote Michael Stumo, CEO of the Coalition for a Prosperous America, on X, prior to the selection being made public. Lori Wallach, the director of the left-leaning Rethink Trade and a longtime friend of the former USTR, trashed Bessent and Lutnick as free traders. In a separate post, Wallach highlighted remarks from Bessent where he claimed his goal for Trump would be to “save international trade [and] not end up looking like something with turn of the century tariffs.” For now, Trump’s pro-tariff allies are projecting confidence: “The reason why this took so long is because Trump wanted somebody that not only the stock market would react positively to, but even more importantly, was unquestionably going to implement his agenda,” said one person close to Trump’s transition, who is also a close ally to Lighthizer. “[Bessent] told the president that he is 100 percent committed to implementing the trade and tariff agenda.”
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