On December 11, the Federal Reserve announced a reduction in interest rates. Fed Chair Jerome Powell noted that the third rate cut this year was far from an easy decision, and that some policymakers supported easing to prevent further weakening of the labor market, while others believed monetary policy was already sufficiently accommodative and that additional easing could fuel inflation. President Donald Trump, however, was dissatisfied, saying the cut could have been “at least doubled”. In fact, since Trump returned to the White House, his disputes with Powell have been ongoing. Ironically, the same Powell who irritated Trump was someone the President himself nominated during his first term, strongly recommended at the time by then–Treasury Secretary Steven Mnuchin, a former Goldman Sachs executive.

Early in Trump’s first term, he considered several candidates for the Fed chair, and his eventual nomination of Powell was largely due to Mnuchin’s strong endorsement. Mnuchin is a quintessential Wall Street elite. After joining Goldman Sachs in 1985, he embarked on a financial career spanning more than three decades, gaining deep familiarity with multinational banking, regulatory systems, and the inner workings of financial markets. His extensive experience in investment banking and capital markets earned him broad networks and strong technical credibility within the financial community. In 2017, Trump chose Mnuchin as Treasury secretary, citing his professional expertise as a banker as an asset for creating more jobs. Mnuchin, for his part, expressed enthusiasm for Trump’s bold economic reform agenda and said his primary focus as Treasury secretary would be stimulating growth through tax reform. He strongly backed Trump’s tax cuts, stating, “any reductions we have in upper-income taxes will be offset by less deductions so that there will be no absolute tax cut for the upper class”.

Against this backdrop of a political “honeymoon”， Mnuchin recommended Powell to Trump as a candidate for Fed chair. Reports suggest that Mnuchin and Powell had a close relationship, and Mnuchin viewed Powell as a sort of safe choice over whom some degree of influence could be exerted. He believed that appointing Powell would not disrupt financial markets, could allow Trump to leave his own imprint on the Fed, and that once in office Powell would refrain from raising interest rates in a way that could undermine economic growth. This judgment was of course proven to be spectacularly wrong. In 2018, Powell raised interest rates multiple times, sending recessionary signals through the U.S. economy, while the U.S. stock market also suffered a sharp decline that year. According to media reports, Trump was furious with Mnuchin, posting on his Truth Social, complaining that “Jerome ‘Too Late’ Powell must NOW lower the rate. Steve ‘Manouychin’ really gave me a ‘beauty’ when he pushed this loser”. Trump certainly believed Mnuchin had performed poorly on economic matters.

In fact, other than Mnuchin, Trump’s first administration included many senior officials with Goldman Sachs backgrounds. These figures included Gary Cohn, former president of Goldman S achs and director of the National Economic Council; Dina Powell, who served as deputy national security adviser and was a senior partner at Goldman Sachs; Stephen Bannon, who served as chief strategist and was a former Goldman Sachs investment banker; and Anthony Scaramucci, who had also been a Goldman Sachs executive and held a brief post in the White House. These officials played key roles in a number of major policy issues. Because of its close ties to the government, Goldman Sachs was even touted as “Government Sachs.” However, on core issues such as economic globalization, free trade, and financial regulation, their positions often stood in clear conflict with Trump’s “America First” and trade-protectionist agenda. For example, on trade policy, many officials with Wall Street backgrounds tended to favor market openness and the free flow of global capital, while Trump leaned toward imposing tariffs and promoting the reshoring of manufacturing. The Los Angeles Times once reported that the faction led by Cohn supported open trade policies and had clear differences with the hardline stance of Peter Navarro. The Wall Street Journal also reported that Trump expressed dissatisfaction during meetings with advisers over the Treasury Department’s lack of support for imposing additional tariffs on China. These fundamental ideological differences created friction within the policymaking teams, which to some extent constrained the Trump administration’s policy efficiency and execution.

These contradictions prompted Trump to make notable adjustments to his personnel strategy in his second term. In the formation of the latest administration, none of the senior officials came from a Goldman Sachs background. Trump has shown a stronger preference for selecting individuals whose political views align closely with his own and who demonstrate a high degree of loyalty to his policy agenda. Of course, Goldman Sachs’ sharply reduced donations to the Republican Party during the campaign are also one of the reasons behind this shift. According to data from OpenSecrets, compared with Trump’s previous election victory in 2016, Goldman Sachs’ contributions to Republicans in 2024 were nearly cut in half.

This shift in personnel appointments carries significant implications for policy implementation. When team members broadly share the president’s strategic objectives and are willing to follow through in execution, policy consensus can be reached more quickly and the government’s decision-making cycle is significantly shortened. Whether it is advancing tax cuts, strengthening industrial policy, expanding manufacturing investment, adjusting regulatory frameworks, or promoting a more open approach to cryptocurrencies, Trump’s second term of administration would be able to move forward with far less resistance. The new Fed chair is also likely to follow the interest-rate-cutting path favored by Trump, allowing fiscal stimulus and monetary easing to work together with greater force.

However, this personnel approach also carries potential risks. Internal checks and buffers help guard against systemic risks arising from excessive stimulus. The absence of such internal balance could make the government more prone to overlooking the accumulation of underlying risks as it aggressively pushes forward industrial policies, tax cuts, and financial deregulation.

Under such a structure, the Trump administration’s policy efficiency may improve on the one hand, particularly in promoting manufacturing growth, stimulating corporate investment, easing financial regulation, and adopting more aggressive monetary and fiscal policies, which could see more visible short-term growth results. On the other hand, financial markets may become more vulnerable to shocks. Successful industrial policy can drive economic expansion and, in turn, fuel financial market gains. However, when deregulation, fiscal stimulus, and monetary easing are pursued in tandem without sufficient technical checks and balances, vulnerabilities are more likely to build within the financial system. Colm Kelleher, chairman of UBS Group, has warned that while regulators are striving to promote economic growth, they have failed to effectively contain risks. He cautioned that the absence of robust regulation could allow systemic risks to gradually surface.

Overall, Trump’s shift in personnel, from a Goldman Sachs–dominated team in his first term to the complete exclusion of officials with Goldman Sachs backgrounds in his second term, reflects a deep reassessment of the internal contradictions he faced during his initial presidency. Whether Trump himself possesses such rational deliberation is a separate question, but from the perspective of the Trump team as a whole, these choices are grounded in a certain strategic logic. This change will not only profoundly shape the direction of the U.S. economy and financial system but will also have far-reaching implications for global financial markets and the international trading system.

Final conclusion analysis:

In a fiercely competitive, high-stakes era, Trump relied heavily on officials with Goldman Sachs backgrounds during his first term. However, their views conflicted with Trump’s on key issues, which hindered policy implementation. Consequently, in his second term, Trump completely abandoned Goldman Sachs–affiliated experts, shifting to a team selected primarily for loyalty and ideological alignment. This change increases policy execution efficiency, but with reduced internal checks, the combination of regulatory easing and stimulus measures could allow financial risks to accumulate, making them more likely to erupt in the future.