Donald Trump has been somewhat cagey about his economic and tariff plans since voters elected him president, raising the stakes in a drawn-out contest to lead his economic team while focusing Wall Street's attention on other key posts.
And Tuesday offered at least one clue about his direction with one of the tariff-friendliest voices in Trump's orbit, Cantor Fitzgerald CEO Howard Lutnick, being announced as the next commerce secretary.
If confirmed, Lutnick would indeed have a key trade role at the department heading up many enforcement efforts and leading any review process of tariffs Trump aims to impose. Trump also announced Tuesday that Lutnick will have "direct responsibility" for the US Trade Representative.
It's a key step, but investors are likely to have many additional questions, especially in terms of who Trump puts in the bigger job of Treasury secretary.
Howard Lutnick, Chairman and CEO of Cantor Fitzgerald and co-chair of the Trump 2024 Transition Team speaks at a rally for former then Republican presidential candidate Donald Trump at Madison Square Garden in New York on October 27. (ANGELA WEISS/AFP via Getty Images) ·ANGELA WEISS via Getty Images
"Investors are on edge regarding ... Trump's Treasury Secretary pick and what it might signal about the balance of power within the administration on economic policy," wrote Evercore ISI in a note to clients this week.
Indeed, reactions to that ongoing selection process suggest that markets have questions about the market-friendliness of Trump's coming administration. Trump is expected to meet with additional candidates for that top post this week — with the chance of a wild card always a distinct possibility.
Perhaps channeling the market's desire for some amount of certainty, BTIG director of policy research Isaac Boltansky added in a recent live Yahoo Finance appearance that "I hope by the end of the week we know who the treasury secretary nominee is."
Relative quiet on economic policy
The unease among business leaders is particularly acute around tariffs and comes after Trump talked about those import duties multiple times a day on the campaign trail. He has been much more circumspect on that subject in recent weeks.
The president-elect appeared last Thursday at a gala in Florida and gave a speech that reprised many campaign promises, from cutting energy prices "in half" to letting Robert F. Kennedy Jr. "go wild" on health issues.
But he notably avoided much in the way of economic policy — and didn't get into trade issues at all.
President-elect Donald Trump speaks at the America First Policy Institute Gala held at Mar-a-Lago on November 14 in Palm Beach, Florida. (Joe Raedle/Getty Images) ·Joe Raedle via Getty Images
In fact, Trump's comments in Tuesday's announcement of Lutnick have been one of his only public comments on the tariff topic in weeks.
But trade, in particular, is top of mind for businesses. Retailers have already begun to shift their plans, as have other businesses, but others have little choice but to wait for signals.
Any concrete sign from Trump "is going to be incredibly influential ... because right now, firms are operating in a bit of a vacuum trying to figure out whether or not he's still committed to double-digit, across-the-board tariffs," said Wendy Edelberg, director of the Hamilton Project at the Brookings Institution, in a recent interview.
During the campaign, Trump promised 60% tariffs on China as well as 10%-20% blanket duties on other trading partners as he again and again extolled tariffs as "the most beautiful word in the dictionary."
Edelberg predicts that any concrete signal as to whether he intends to follow through will lead many businesses to respond "quite quickly and aggressively."
Other countries are also being left in suspense.
Adam Posen, the president of the Peterson Institute for International Economics, offered up in a recent digital event that "the governments of major economies are making plans to sort of preemptively make offers of various kinds to the Trump administration" — citing increased natural gas purchases as one carrot to offer in return for backing off tariffs.
The question is whether Trump's eventual complete team will be receptive.
A "number of the people close to the president-elect believe trade deficits are a really big deal," Posen said, and smaller concessions like energy purchases are unlikely to be satisfying on that front.
What Trump's treasury pick could signal
What's also unclear is who will be atop Trump's team at the Treasury Department as jockeying for that post continues and other preeminent positions remain unfilled, notably the director of the National Economic Council. That latter position is often described as a president's top economic adviser.
Trump has also not yet announced a pick for his trade representative, another figure who will be front and center in any tariff conversations alongside Howard Lutnick.
Trump is expected to meet with two new treasury candidates — former Federal Reserve governor Kevin Warsh and Apollo Global Management CEO Marc Rowan — in the coming days. (Disclosure: Yahoo Finance is owned by Apollo Global Management).
Two other contenders appear to be Scott Bessent, a former Soros Fund Management investing chief, and Republican Sen. Bill Hagerty of Tennessee.
Then Republican candidate Trump, left, listens as investor Scott Bessent speaks on the economy in Asheville in August. (AP Photo/Matt Kelley) ·ASSOCIATED PRESS
Lutnick had been seen as a top treasury choice as recently as last week but saw his stock fall there and is now headed to the Commerce department instead. He nonetheless gained considerable attention for pro-tariff comments during the campaign.
"When was America great?" he asked the crowd at Madison Square Garden before the election and before discussing the 1890s as an era before income taxes when "all we had was tariffs" and the economy was "rocking."
BTIG's Boltansky said in a recent Yahoo Finance appearance that "if we have Bessent as the pick, I think that it's going to reinforce what many of us, including myself, believe, which is that the market is ultimately going to be a governor on some of Trump's policy moves."
The other candidates, Boltansky added, would fall somewhere in between Bessent and Lutnick, who had been seen as possibly signaling "a more aggressive pushing on the tariff side of the story and perhaps not as much interest in near-term volatility in markets."
Evercore ISI in its note this week cited Bessent as "the investor favorite" and noted a Bloomberg report that Bessent could be headed to the National Economic Council and said it could calm some market fears if that comes to be.
But the authors were quick to note that there is little sense that uncertainty will go away entirely even once Trump posts his Treasury pick on Truth Social.
"Questions will remain over how much influence this person will actually have over an administration in which the President firmly embraces tariffs," they note.
This post has been updated with additional developments.
Ben Werschkul is Washington correspondent for Yahoo Finance.
Every Friday, Yahoo Finance's Rachelle Akuffo, Rick Newman, and Ben Werschkul bring you a unique look at how US policy and government affect your bottom line on Capitol Gains. Watch or listen to Capitol Gains on Apple Podcasts, Spotify, or wherever you find your favorite podcasts.
