Optimism but not confidence as Trump takes control

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The writer is an FT contributing editor, chief economist at American Compass and writes the Understanding America newsletter 

Washington was brimming with optimism this weekend, but not confidence. At the receptions and galas where gossip is the main currency, and on the podcasts where everyone sells their own spin, positivity reigned. “Trump really has a chance to . . . ” people said. “There’s so much upside.”

No doubt this is a “vibe shift”, as commentary suggests, especially when contrasted with the senescent presidency drawing slowly and painfully to a close. The return of a president who can do anything at all will be a major upgrade by default. But the enormous opportunity for reformed governance to deliver a new “golden age”, as the Trump team likes to put it, is not matched by any certainty about how his administration is likely to proceed.

Everyone wants to talk about artificial intelligence, for instance — though less because of excitement about superintelligence than because of the more mundane potential for enhanced productivity. The issue is that continuing to improve the models and expand their capacity for widespread application will require Herculean infrastructure investments on barely plausible timelines.

In one possible world, Donald Trump and his team focus their economic agenda on building: rapidly developing natural resources, expanding infrastructure, subsidising investment and training the workforce. That would make most sense, but it’s not something they have talked about much. Trump himself has been more likely to focus his enthusiasm on cryptocurrency, while high-profile supporters such as Elon Musk and Vivek Ramaswamy have spent most of their energy criticising American culture and calling for more foreign workers. 

Likewise, disentangling the American and Chinese economies has become crucially important and Trump has indicated his support on this, including a call to revoke China’s “permanent normal trade relations” status in the Republican party’s platform. Yet despite issuing an executive order in 2020 to ban TikTok, he is now recasting himself as its saviour. A law requiring the parent company, ByteDance, to divest the service to an American firm or else shut it down by January 19 led to the platform going dark that day. Users received a notice that the company looked forward to working with Trump to reinstate it. And Trump is now saying he will do just that. In response, ByteDance brought TikTok back online, to the delight of users. 

Is Trump the China hawk determined to reverse the mistakes of globalisation, even if Americans have to experience some pain while climbing back out of the hole they’ve dug themselves? Or is he more interested in scoring points as the president who protected TikTok after his predecessor let it languish?

There are countless similar questions. Is the fight over extending the Tax Cuts and Jobs Act of 2017 going to dominate the legislative calendar for the first year? Will the government adopt humane tactics for deporting illegal immigrants to preserve public support for the action, or proceed in ways designed to spark backlash and polarisation?

Will the administration merely relish attacking the excesses of the higher education system, or will it work equally hard to build useful new non-college pathways to good jobs? Will the “Department of Government Efficiency” focus on government efficiency or cause constant commotion outside its ambit?

The grounds for optimism lie in the quality of the senior appointments that Trump has made, which represent extraordinary improvements over his first-term choices. If the administration’s discipline and execution have travelled as far as the distance from a Mike Pence to a JD Vance, a Rex Tillerson to a Marco Rubio, or a Reince Priebus to a Susie Wiles, a new golden age may indeed be upon us.

Whereas in 2016 Trump outran the supply lines of supporting institutions, ideas and staff, he can now draw from a deep bench of talent and a thick playbook aligned with his own priorities. Across agencies and White House offices, he is quietly stocking his team with serious players.

But the team captain, the coach and the quarterback is still Trump himself. Not many people have done well placing bets on the decisions he will make in the Oval Office, least of all when predicting he will do the expected thing that the conventional analysis recommends. The fruit is larger and juicier and hanging lower than ever, and now everyone waits to see what he will pick.