In the Fog: US Economic Leadership Appointment... "Waller to Become Fed Chair After Treasury Secretary Nomination"

Donald Trump, the President-elect of the United States, has nominated Kevin Warsh, a former Federal Reserve (Fed) governor, as the next administration's 'economic commander' and Treasury Secretary. According to the Wall Street Journal (WSJ) on the 21st (local time), Trump is also considering nominating Warsh as Fed Chair when the current Fed Chair Jerome Powell's term ends in 2026.

Kevin Warsh, former member of the U.S. Federal Reserve Board (Fed) Photo by Reuters Yonhap News

According to multiple sources, Trump discussed this with Warsh during a meeting held the previous day at his private residence, the Mar-a-Lago resort in Florida. Warsh emerged as a new candidate after intense competition between Scott Bessent, CEO of Kysquare Group, and Howard Lutnick, CEO of Cantor Fitzgerald?both initially strong contenders for Treasury Secretary?led to a 'knife fight' description, lowering the chances of either being nominated.

Warsh, 52 years old this year, is a financial expert from Morgan Stanley and was also considered a strong candidate for Fed Chair during Trump's first term. He served as White House economic policy advisor under the George W. Bush administration in 2002 and was appointed the youngest Fed governor in 2006, stepping down in 2011. He is also known domestically for serving as a director of Coupang Inc., the parent company of Coupang.

In particular, sources said that Trump initially planned to appoint Bessent, who was a candidate for Treasury Secretary, as the next White House National Economic Council (NEC) Chair, and then nominate Warsh as Fed Chair. After Warsh moves to Fed Chair, Bessent would then be nominated as Treasury Secretary. Earlier, Bloomberg also reported that Trump was considering the combination of Warsh as Treasury Secretary and Bessent as NEC Chair.

However, this is still in the early discussion stage, and there is a possibility that Trump may change his mind. Mark Rowan, CEO of asset management firm Apollo Global, is also emerging as a new candidate for Treasury Secretary. Trump is said to have praised Rowan to his close aides. However, local media have evaluated that Rowan would face issues due to ethics rules for public officials, including conflict of interest, which would require him to leave Apollo.

The Treasury Secretary, fifth in the presidential line of succession, oversees the $28 trillion government bond market and more than 40 economic sanction programs ranging from trade to banking. Especially in Trump's second term, the Treasury Secretary is expected to play a leading role in the trade war, including imposing up to 20% universal tariffs and 60% high tariffs on Chinese goods.

During the meeting with Warsh the previous day, Trump reportedly asked about Warsh's past stance on tariffs. Warsh has publicly criticized protectionist policies in the past. In a 2018 WSJ opinion piece, he argued that then-President Trump's tariff plans could lead to American economic isolationism and "would do great harm to our economic growth prospects."

Warsh was also considered by Trump as a Fed governor during his first administration. Trump reportedly regretted choosing Powell as Fed Chair instead of Warsh at that time. Sources say that Trump is still deliberating over the Fed Chair position and is unlikely to make a final decision until Powell's term ends in May 2026. Ahead of the election, Trump argued that the president should have more say in the Fed's interest rate decisions. However, in a June interview with Bloomberg, he said, "If he (Powell) does the right thing," he would let Powell remain Fed Chair until the end of his term.