The Scene
A clique of Wall Street veterans have emerged as the most vocal and visible economic surrogates for Donald Trump: billionaire investor John Paulson, Cantor Fitzgerald CEO Howard Lutnick, and former Soros star Scott Bessent. And they are all jockeying for jobs or influence in a potential Trump administration. (Wall Street’s Democrats have their own race going.)
We talked to Paulson about Trump’s economic plans, and the possibility of serving as Trump’s Treasury Secretary. The conversation below has been condensed and edited for clarity.
Q&A
Joseph Zeballos-Roig: You’ve said that Mr. Trump would use “reasonable tariffs” to boost US manufacturers. He has talked about a tariff in the 10% to 20% range. Do you think that’s reasonable?
John Paulson: It’s a good number. We have about $3 trillion of imports. So 15% on $3 trillion would produce $450 billion in revenue. It makes sense to have the bulk of the tariffs targeted to industries that are subject to unfair trade competition and to industries that are strategic, both for industry and defense.
So you believe he would veer in a more targeted direction, instead of the universal tariff he’s talked about?
I do think so, yes.
Something that’s been brought up in this campaign by both sides is the need to bring down costs. Is a tariff a tax on consumers?
It would result in higher import prices. But on the other hand, it supports domestic manufacturing, so you get more jobs, more investment in the US, more taxes. [Trump] did raise tariffs, particularly on China, and that did not result in increased inflation. So you have to look at the totality of the program.
Are you concerned about retaliatory tariffs?
It’s time for us to retaliate against the unfair trade practices we’ve been receiving and act in a reciprocal fashion. Look at Tesla. When Tesla wanted to sell cars to China, it wasn’t allowed. They forced Tesla to build a factory in China to sell cars in China. We don’t have any similar restrictions on foreigners exporting their cars here. The result is huge trade deficits.
Mortgage financing giants Fannie and Freddie are still in conservatorship. Would you expect a second Trump administration to take steps to release them?
I would expect either administration to release [them] from conservatorship. The conservatorship was supposed to be temporary, to allow time for both Fannie and Freddie to rebuild their capital. They have, between them, approximately $150 billion of capital, and are coming close to the point where they could be returned to the private sector. [Their regulator has said they need $250 billion to $300 billion.]
The benefit to either administration is… that the government will be the big winner, because the government owns about 90% of the equity. So as they ultimately sell that equity over time, that produces large gains for the government.
Have you spoken to the former president about it?
I have not. It’s important, but a relatively small item in the overall agenda.
Would you serve as Treasury secretary if asked?
The most important thing at this point is for President Trump to be elected. If he is, I’m willing to serve in any capacity that I could be helpful.