Will Elon Musk dominate President Trump’s economic policy?

To get a full sense of the disruptive potential of Donald Trump’s economic agenda, look beyond the limelight hogged by Elon Musk to the wider cast of characters in the president-elect’s orbit. Russ Vought, a budget director, promises to “break the bureaucracy to the presidential will”. Peter Navarro, a trade adviser, muses about cancelling America’s trade deal with Canada and Mexico. Andrew Ferguson, an antitrust official, rails against big tech firms for suppressing dissident speech.

These are just a few of the voices in the universe of people who will shape Trumponomics. Presidents normally have an assortment of officials and advisers contributing to their economic team. In Mr Trump’s case, though, the team is unusually large, stretching from business magnates to academic iconoclasts. How do they fit together? And how will they seek to reshape the American economy?

It is useful to divide Mr Trump’s acolytes into three groups: conservative mainstreamers, America firsters and tech tycoons. In many cases there is overlap. Most agree that America needs fewer regulations, smaller government, lower taxes, less immigration and a tougher stance on foreign opponents. Virtually all bring extensive experience, whether in government or the private sector, to the table. But their priorities and prescriptions vary widely. Supporters of Mr Trump believe that, when refracted through his Oval Office, these disagreements will make for better decisions. If managed poorly, they could just as easily lead to chaotic governance.

As in Mr Trump’s first administration, conservative mainstreamers hold a clutch of prominent offices. They can be expected to counter the most extreme protectionist impulses that course through Trumponomics. Scott Bessent, a hedge-fund manager, is due to run Treasury. Kevin Hassett, a respected economist and senior adviser in Mr Trump’s first term, will lead the National Economic Council (NEC). Howard Lutnick, chief executive of Cantor Fitzgerald, a broker and investment bank, has been nominated as commerce secretary. And Doug Burgum, former governor of North Dakota and a serial entrepreneur, will lead the interior department.

Investors and diplomats alike breathed a sigh of relief at these appointments, especially after Mr Trump’s more controversial nominees for positions such as defence secretary and attorney general. “He has kept the clown car away from the economy,” is how one diplomat in Washington, DC, puts it. There are echoes with the moderating roles played in the first Trump administration by Steven Mnuchin as Treasury Secretary and Gary Cohn in the NEC, both alumni of Goldman Sachs, a bank.

But the mainstreamers appear more willing to go along with Mr Trump’s agenda this time around. Mr Hassett has said that 10% universal tariffs would deliver “pretty significant” benefits for America, helping to onshore global production. Mr Bessent, for his part, has talked about tariffs as a “negotiating position”—implying that he sees value in such levies, even if not as an end in themselves. Mr Lutnick, a man with brawler instincts, has gone even further. “You’ve got to tariff the rest of the world. Keep them the heck out. Bring the manufacturing back here,” he said in an interview before the election. Even so, investors are still counting on the mainstreamers to sand down the roughest edges of Trumponomics. The challenge for Mr Bessent, in particular, will be to push back against tariffs without undermining his own standing. “He will need to channel the market, to make it look like the opposition is coming from the market, not from himself,” says a former Trump adviser.

America firsters represent the backbone of Trumponomics. Their goal of maintaining American dominance of the global order has been Mr Trump’s guiding principle since entering national politics a decade ago. And unlike during his first term, when there was a scramble to staff his administration, which brought in many officials who did not share Mr Trump’s views, most this time have been vetted for ideological fealty. That makes the America firsters a more formidable group now, from the high priests leading the way to the wonks implementing their vision.

Their supremo is Stephen Miller, deputy chief of staff in the White House, where he will be responsible for policy. In Mr Trump’s first term, Mr Miller was best known as a hardline adviser on immigration, helping to craft controversial rules that separated parents from children. Mr Miller will again spearhead a crackdown on immigration, which may end up having a greater impact on the economy than any other element of Trumponomics.

But he will also have a broader role. After leaving office, Mr Miller established the America First Legal Foundation to fight what many conservatives see as overreach of the administrative state. During the election campaign, he was a loud defender of tariffs, endorsing a strategy of using them as a tax on imports while cutting taxes on made-in-America production. And he has got into the weeds of legislative strategy. He has called for a phased approach, pushing for an immigration package within Mr Trump’s first month in office before moving on to a tax bill. Some Republican representatives fear the two-step plan will drain momentum for tax cuts, but Mr Miller is in the driving seat. He will be able to rely on his ally, Vince Haley, to help push things forward as director of the Domestic Policy Council, a post that oversees all departments.

Absent from Mr Trump’s administration, to the surprise of many, is Robert Lighthizer, architect of his first-term trade war with China. An adviser involved in the transition says that should not be read as a weakening of Mr Trump’s desire to use tariffs against China and other countries. Jamieson Greer, a protégé of Mr Lighthizer, will be the country’s trade representative. Before the election Mr Greer called on Congress to revoke China’s status of permanent normal trading relations with America, a move that would cement higher tariffs and signal that decoupling from China is the new normal. “Trump likes Lighthizer, and I’m sure at some point he will be back in,” says Stephen Moore, an economic adviser to the president-elect.

One America firster making a triumphant return to the White House is Peter Navarro, again in a role advising Mr Trump on trade and manufacturing. An ornery former academic, Mr Navarro was often a one-man team in Mr Trump’s White House, sidelined from major trade talks. But insiders say he remains deeply trusted by Mr Trump (not least because he spent time in prison for refusing to testify to Congress about the riot of January 6th, 2021). He remains one of the staunchest proponents of extensive tariffs.

For the actual delivery of Trumponomics, the pivotal actor may well be Russ Vought, who has been nominated as director of the Office of Management and Budget. In normal times the OMB has a claim to being the most powerful agency in Washington, since it co-ordinates the president’s budget and helps direct other agencies. In Mr Vought’s hands it will be even more potent. “Russ has been the guy for the last four years that has been developing the plan to take down the deep state,” Mr Miller recently effused about him.

2025: as projected?

That is only slight hyperbole: having led the OMB in Mr Trump’s first term, Mr Vought knows his way around the bureaucracy; and as one of the creators of the controversial “Project 2025” agenda, he has indeed spent the past four years thinking about how to change things. He wants to curtail the independence of federal organs such as the Department of Justice (DoJ), end employment protections for career civil servants and get the president-elect to hold back, or impound, Congress-approved spending to slash the budget. Mr Vought may also be deeply involved in trying to shred the Inflation Reduction Act, Joe Biden’s clean-energy law that many Republicans loathe. Despite that sentiment, some Republicans in Congress will fight to maintain it because they have witnessed it catalyse big investments in their regions. “Repeal is something that the grassroots wants and that has been promised to them, and Russ is going to be extremely influential in advocating that view,” says Michael Strain of the American Enterprise Institute, a think-tank.

The newest group in Mr Trump’s economic firmament is the tech tycoons. The most visible are Mr Musk and Vivek Ramaswamy, a biotech billionaire and former Republican presidential candidate, who together will lead the Department of Government Efficiency. Despite its official-sounding name, DOGE will be an advisory commission that draws its power from Mr Musk’s proximity to Mr Trump. The goal is to shrink the federal workforce, reduce regulation and slash spending. DOGE’s arrival on the scene has stirred up excitement among a large subset of Republicans, who see almost revolutionary potential in Mr Musk’s zeal, energy and clout. “In five years in Congress, I’ve been awaiting a fundamental change in the dynamic. It has arrived,” Dan Bishop, a representative from North Carolina, recently exclaimed.

Beyond Mr Musk, there are several tech experts now connected to the administration. Some are purely informal. Marc Andreessen, co-founder of Andreessen Horowitz, a venture-capital giant, said in December that he had spent half his time since the election at Mr Trump’s Mar-a-Lago compound, offering views on economic and tech policy, as well as helping hire officials. One of Mr Andreessen’s ideas—that “big tech” firms (established companies such as Meta or Google) are too powerful, limiting space for “little tech” startups—has already helped shape Mr Trump’s view of the industry. Still, once the administration is up and running, and the centre of gravity shifts to the White House, opportunities for informal consultation at Mar-a-Lago will probably diminish.

Other tech tycoons will have more permanent perches. David Sacks, part of the “PayPal mafia” that was involved with the payments firm in its early days, will be the White House tsar on artificial intelligence and crypto, a position that will give him access to Mr Trump without the hassle or scrutiny that comes with a normal confirmation process. Mr Sacks will, in turn, have a team of advisers rooted in Silicon Valley, including Sriram Krishnan, a tech whiz with Andreessen Horowitz. Some in the industry believe more power may lie with Michael Kratsios, named as director of the Office of Science and Technology, owing to his longer relationship with Mr Trump. A rough division of labour could have Messrs Kratsios and Krishnan advocating for looser regulation on AI companies, while Mr Sacks pushes for greater legal clarity for crypto firms.

Mr Trump has nominated Scott Kupor, a managing partner at Andreessen Horowitz, to serve as director of the Office of Personnel Management, which oversees government hiring and helps divvy up resources. That could make Mr Kupor one of the conduits for the efficiency drive that Messrs Musk and Ramaswamy want to unleash. It also suggests that Andreessen Horowitz has replaced Goldman Sachs as the launchpad for business bigwigs who want to enter the administration. Deregulation is, generally speaking, good for their ventures—directly so for those with large crypto holdings. Some like Mr Musk are in line for hefty defence contracts. Many also share a techno-libertarian belief in smaller government as a good thing in its own right, and see Mr Trump as likely to roll back Joe Biden’s statist policies.

America first, second and third

It is possible to conjure a scenario in which the three groups pull in the same direction: the America firsters as the motor, propelling the administration forward; the mainstreamers as the shock absorbers, cushioning bumps along the way; and the tech tycoons providing tools for a speedier ride. For a glimpse of how this might work in practice, consider energy. As Secretary of the Interior, Mr Burgum will try to tie together both Mr Trump’s “drill, baby, drill” mantra and the quest to retain America’s tech supremacy. Much easier permitting rules, it is hoped, will boost oil-and-gas production, to the benefit of the AI industry. He will be supported by the deputy secretary of Treasury, Michael Faulkender, who served in Treasury in Mr Trump’s first term and spent the past few years at the America First Policy Institute, a think-tank. He has helped craft blueprints, ready for day one, to encourage drilling.

A similar dynamic could emerge in regulation. Mr Trump has appointed a series of veterans who buy into the tough-on-big-tech, soft-on-little-tech stance. At the DoJ, Gail Slater will be the next leader of the antitrust division. Ms Slater was an economic adviser to J.D. Vance, the incoming vice-president who is known for his antipathy to Silicon Valley giants. Yet she also previously served as general counsel at the Internet Association, an industry group, where she argued that government interference stifled innovation. At the Federal Trade Commission (FTC), the main anti-monopoly regulator, Mr Trump has elevated current commissioner Andrew Ferguson, whose dissenting opinions indicate a higher bar for challenging deals than his Biden-appointed predecessor, Lina Khan. Mr Trump has also added Mark Meador, an antitrust lawyer who joined the DoJ in Mr Trump’s first term, to the FTC as a new commissioner, cementing its Republican majority. Mr Meador has been a pointed critic of big-tech firms and, as an adviser to Senator Mike Lee of Utah, drafted a bill that would have forced Google to break up its advertising business.

It is, however, just as easy to conjure an alternative scenario, where the various splits between advisers and officials slow things down. The most obvious division is between America firsters and mainstreamers on tariffs. Although their disagreements are less pronounced than in Mr Trump’s first term, the president-elect enters office with a much more radical plan. If he is serious about slapping punishingly high levies on countries, whether foes or allies, Messrs Bessent and Hassett will have their work cut out. “There is going to be a tug of war between the more traditional Reaganite free-marketeers and the voices that believe in big government driving the economy,” says Mr Moore.

A dispute has already flared up about immigration. The tech tycoons know all too well how essential it is for America to attract skilled workers from around the world, whereas the most extreme of the America firsters see immigration of any sort as an affront to the native-born. After the appointment of Mr Krishnan as an AI adviser, some xenophobes on social media bridled at the apparent clout of the Indian-born entrepreneur, though he is an American citizen. That, in turn, triggered a debate about the H-1B visa programme, a big recruitment channel for tech firms in need of high-skill workers. Mr Musk and his friends want to expand issuance and speed up processing times; Mr Miller believes foreigners with H-1B visas displace Americans and so wants to restrict them.

Hawkishness towards China may also cause rifts. China is home to Tesla’s busiest factory and is its second-biggest market. That does not automatically mean Mr Musk will take China’s side. In other ventures, including SpaceX, his rocket business, Mr Musk’s interests are firmly in the American camp. But it could still make him a voice for moderation. Similarly, Mr Lutnick’s business is intertwined with China: his firm has helped Chinese companies sell stocks in America and has a joint venture with a Chinese state-owned enterprise. Such ties stand in contrast to the deeply held views of Mr Navarro, co-author of “Death by China”, a book about China’s threat to America’s economic dominance.

Even tax cuts—an axiom of Trumponomics—may cause problems. Steve Bannon, Mr Trump’s chief strategist at the start of his first term, recently called for tax rises on corporations and the wealthy. Mr Bannon is not part of Mr Trump’s administration, and the president-elect would like to do just the opposite. At the same time, Mr Bannon is beloved by many in the America-first camp. His views offer a preview of possible dissent to come.

The stresses of governance are certain to expose more fault lines. In the abstract any card-carrying Republican can get behind the idea of shrinking the government. In practice, questions about what to cut are vexing. Mr Trump has vowed not to lay a hand on Social Security. But Republican lawmakers who have met Messrs Musk and Ramaswamy say nothing will be sacrosanct. That Mr Trump has tapped Mr Miller’s wife, Katie, to join DOGE suggests that the America-first camp wants to keep a close eye on the tech tycoons.

Mr Musk goes to Washington

DOGE’s supremos have already had a taste of how frustrating legislative battles can be. In December, when Congress ended up passing a budget without lifting the debt ceiling—against the wishes of Messrs Trump and Musk—the latter offered distinctly muted praise of Mike Johnson, the Republican speaker of the House of Representatives. He did “a good job here, given the circumstances”, Mr Musk said. The problem is that the circumstances will not get any better. Politics is rough. Even if Mr Trump’s new team is better-prepared and more cohesive than in his first term, it is about to face an almighty test. ■

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