Informed sources revealed that USA's elected president Trump has proposed choosing financier Kevin Warsh as the USA Secretary of Treasury. When Federal Reserve Chair Powell's term ends in 2026, Warsh may also be nominated as Federal Reserve Chair.

The informed sources indicated that Trump discussed this potential arrangement with Warsh on Wednesday at his private club Mar-a-Lago in Florida.

In the past week, Warsh has become one of the hottest candidates for USA Secretary of Treasury. However, as of Thursday evening, Trump has not officially decided who will take on this key cabinet position. Informed sources stated that Trump is also weighing how to handle the vacancy at the Federal Reserve and is likely to make a final decision before Powell's term ends in May 2026.

Some informed sources revealed that Trump is also considering appointing Wall Street investor Scott Bessent to lead the White House Economic Council, aiming to later nominate Bessent as Secretary of Treasury when Warsh eventually becomes Federal Reserve Chair.

Following the news, the probability of Kevin Warsh becoming the next USA Secretary of Treasury on the crypto prediction platform Polymarket quickly jumped to around 55%.

Of course, as Trump's aides often remind: until an official announcement is made, Trump is likely to change his mind at any time. He may still decide not to choose Warsh or Bessent for these positions but rather opt for one of the other popular candidates to lead the Treasury, such as another frontrunner for Secretary of Treasury—Marc Rowan, CEO of Apollo Global Management. In recent days, Trump has been holding closed-door discussions regarding the Secretary of Treasury candidates.

Bessent has publicly stated that Trump should quickly announce who he plans to choose as Powell's successor so that the 'shadow' chair can attempt to weaken Powell, making him a 'lame duck.'

How will Wosh influence Powell 2.0's policy guidelines?

According to a person familiar with the matter, during Wednesday's meeting, Trump asked Wosh about his past positions on tariffs. Wosh has been a critic of trade protectionist policies.

In a commentary published in the media in 2018, Wosh suggested that Trump's tariff plan might lead to what he termed America's "economic isolationism." Wosh wrote at the time, "Trump's mercantilist rhetoric may prove to be more than just a negotiating strategy; it foreshadows new tariffs and trade restrictions around the world. Economic isolationism will inflict significant damage on our economic growth prospects."

It remains unclear whether Wosh's long-standing support for free and open trade can persuade Trump to change his stance.

Although industry insiders currently generally believe that regardless of who becomes the next U.S. Treasury Secretary, tariff increases will be an inevitable theme of the Trump 2.0 era. However, if Wosh were to assume this position, the market would focus on whether this would soften Trump's hardline stance on tariffs.

The 54-year-old Wosh previously worked at morgan stanley and later served as an economic advisor in the George W. Bush administration. In 2006, he entered the Federal Reserve Board as the youngest governor in history. Notably, Wosh was one of the candidates Trump considered for Federal Reserve Chair during his first term. However, Trump later chose Powell, although his view on Powell quickly changed after the Fed raised interest rates at that time.

For a long time, Wosh has also been seen as a potential candidate to succeed Powell, with some of Trump's economic advisors previously urging Trump to select him for the position.

Public information shows that Wosh has a good personal relationship with Trump, and Wosh's connections and Republican background might be viewed as advantages by Trump and his allies.

In fact, apart from his stance on tariffs, Waller, from multiple perspectives, is actually a relatively bullish candidate for the position of US Treasury Secretary or Fed Chair in terms of market stability. Although Trump advocates for the president to have a say on monetary policy issues, Waller, as a former Federal Reserve governor, has repeatedly emphasized the importance of the Fed's independence.

Waller also advocates for reducing the burden of government debt. Bob Savage, head of market strategy and insights at New York banks, believes that 'if Waller is likely to be nominated, concerns about how the Fed and the Treasury cooperate to help the government finance will decrease.'

David Wessel, director of the Hutchins Center on Fiscal and Monetary Policy at the Brookings Institution, stated that although Waller is not an economist, he has a lot of experience in handling how the economy is running and how the economy interacts with policy. 'His main skill is dealing with people. He is very good at getting along with others.'

Editor/Rocky