WASHINGTON (AP) — President-elect Donald Trump’s decision on a Treasury secretary is about much more than whose name will be printed on America’s money.
The choice of how to fill his high-profile open Cabinet selection will be the clearest indication yet of how he plans to handle import tariffs in his new administration.
The leading candidates for the role have expressed differing perspectives on how Trump should use the protectionist trade policies he made central to his campaign for the White House, while Trump himself has expressed seemingly contradictory views.
Billionaire investor Scott Bessent, considered a leading candidate, has cited tariffs as a negotiating ploy. Another prominent candidate, Cantor Fitzgerald CEO Howard Lutnick, has expressed more support for broad tariffs. Lutnick is co-chairing Trump’s transition operation and helping put forward candidates for key positions, including the Treasury Department.
Trump is also looking at other potential candidates as he decides who can best implement his economic agenda — and what major role tariffs will play.
The president-elect during this year’s campaign portrayed taxes on imports as both a bargaining tool to secure better trade terms and as a way to raise revenue to finance tax cuts elsewhere.
The Republican has proposed universal tariffs as high as 20% and taxing Chinese imports at 60% or more, but his campaign never fleshed out key details about how the tariffs would be imposed and whether the goal was more to fund the government or to put pressure on trading partners. .
These two are competing priorities: achieving sustainable long-term revenues from tariffs is not possible if they are a bargaining tool, and maintaining them for the long term could limit the growth that Trump has promised to bring to the country.
The lack of clarity has also translated into Trump’s choice of treasury secretary, as tariffs risk worsening inflation and also disrupting stock market gains since the election, which the president-elect prides himself on is up.
Bessent told Bloomberg News in August that he views tariffs as a “one-time price adjustment” and “non-inflationary,” and that tariffs imposed during a second Trump administration would mainly target China.
In a Fox News op-ed last week, Bessent said tariffs are “a useful tool to achieve the president’s foreign policy goals. Whether it’s pushing allies to spend more on their own defense, opening foreign markets to U.S. exports, securing cooperation in ending illegal immigration and banning the fentanyl trade, or deterring of military aggression: tariffs can play a central role.”
An advocate for imposing sweeping tariffs, Lutnick told CNBC in September that “tariffs are a great tool for the president to use – we need to protect the American worker.”
On Saturday, Elon Musk, who was an influential voice on Trump’s side during the transition, spoke out in favor of Lutnick on his social media site X.
“My opinion is that Bessent is a ‘business as usual’ choice, while @howardlutnick will actually bring about change,” Musk said. “Business-as-usual is driving America bankrupt, so we need change.”
Higher tariffs also pose serious risks to Trump’s coming presidency, despite Trump’s promises to the public that they will lead to more factory jobs and stronger growth.
The tariffs could upset trading partners and spark a trade war. They can anger investors and cause stocks to fall. They could alienate voters who supported Trump out of frustration over higher prices, only to find that their coffee, T-shirts, cars and other goods all cost more.
In August, economists Mary Lovely and Kimberly Claussing found that a 60% tariff on China and a separate 20% universal tariff would cost an average American household $2,600 annually.
Corporate America is closely watching Trump’s transition operation at his Mar-a-Lago resort in Florida and trying to figure out how to respond in the meantime.
To be fair, choosing one or the other does not mean that Trump will not take a different path once in the White House, as was evident during his first term.
That has led companies to tell investors they are planning a wide range of scenarios, many of which are aimed at reducing their dependence on China.
When asked what policies Trump would demand from his Treasury secretary on day one, his transition team said it was focusing on personnel choices.
“President-elect Trump is making decisions about who will serve in his second administration,” said Karoline Leavitt, the transition spokeswoman and incoming White House press secretary. “Those decisions will be announced by him as they are made.”
Major companies participating in this month’s election accepted a degree of uncertainty about the rates and said they were planning for a range of outcomes.
Donald Allan Jr., CEO of toolmaker Stanley Black & Decker, said during an Oct. 29 earnings call that his company has been considering the possibility of higher rates since the spring. He emphasized that there are still many unknowns, but that his company is unlikely to move more manufacturing jobs to the United States because “it’s just not profitable to do that.”
“What we don’t know is which scenario will play out and what exactly that would be like. Will it be just China? Will it be every country?” Allan said. “These are all things that need to be determined.”
Timothy Boyle, chairman and CEO of Columbia Sportswear, said during his Oct. 30 earnings call that his company was “very concerned” about tariffs despite having minimal exposure to Chinese imports.
“We believe the arguments about tariffs improving domestic production of items such as shoes and clothing are misleading,” Boyle said.
Furniture and home goods retailer Williams Sonoma said about half of its imports came from China in 2018, when Trump was the last president, a number that has since fallen to 25% and could fall further if tariffs are extended.
But Constellation Brands, a manufacturer and marketer of alcoholic beverages, noted that its sales rose by double digits four years in a row when Trump was last in the White House. CEO William Newlands downplayed the risk that Trump would hit Mexico with tariffs, even as Trump has talked about new tariffs on Mexican factories and the country is preparing for that possibility.
Constellation is betting that Trump will mainly focus on China.
“The general belief is that if a situation were to arise related to tariffs, it is very likely that Mexico is not the main target – it is China,” Newlands said.
___
Associated Press writers Zeke Miller in West Palm Beach, Florida, and Michelle L. Price in New York contributed to this report.
