Goldman's Rob Kaplan unpacks Trump economics

At Bloomberg's Sell-side Leaders Forum today, Rob Kaplan, Vice Chairman at Goldman Sachs, offered a candid breakdown of the Trump administration's economic playbook.

Framed through the lens of structural reform, energy policy, and trade strategy, Kaplan's remarks highlight what's driving both market optimism and executive uncertainty.

Below is a distilled take on his key points—with some added interpretation on what it all means for capital allocators, business leaders, and the broader economy.

1. Fiscal, structural reform & the deleveraging dilemma

Kaplan emphasized that the Trump administration (correctly) views the U.S. government as dangerously over-leveraged. In the 1970s, public debt was about 30–35% of GDP; today, it's north of 100%.

The administration’s intent—at least rhetorically—is to drive down fiscal deficits and gradually deleverage. However, the path to that goal is murky given the scale of tax cuts and rising entitlement spending.

Strategic Implication: The rhetoric of fiscal responsibility clashes with the reality of expansionary fiscal policy. Markets should price in continued large deficits unless entitlement reform or serious spending cuts materialize—both politically toxic options.

2. Regulatory reform as productivity strategy

The administration’s economic theory centers on three levers of growth:

• Workforce expansion
• Productivity gains (via deregulation)
• Increased leverage (private sector)

Kaplan noted that regulatory review is underway across nearly every sector. The idea is to reduce friction, especially in industries like energy, finance, and manufacturing, to boost productivity without large-scale capital investment.

Takeaway for Investors: Watch for sector-specific deregulation plays, particularly in industries that are capital-intensive and historically over-regulated. But long-term productivity increases from deregulation alone are difficult to model with confidence.

3. Energy as a foreign policy lever

A key priority is reorienting U.S. energy strategy toward increased global oil output. Kaplan stated the administration is pressuring OPEC and other global producers to ramp up production, with the U.S. playing a more dominant role.

Interpretation: This isn't just about lowering prices. It's a geopolitical strategy to use oil supply diplomacy to influence adversaries and allies. But it also reflects confidence in U.S. shale competitiveness and a desire to undermine high-cost producers globally.

4. Immigration policy and labor market risk

Kaplan flagged a fundamental contradiction in the administration’s labor policy: While growth in the U.S. labor force—especially since the 1990s—was largely driven by immigration (including undocumented workers), current policy is simultaneously restricting undocumented labor and failing to expand legal immigration.

• Key data points:
  • Millions of undocumented workers are embedded in agriculture, construction, and service sectors.
  • ~13 million green card holders in the U.S.

Strategic Risk: Labor shortages may deepen in low-margin industries. Consumer spending could cool as undocumented populations disengage. This undermines near-term growth and creates distortions in local labor markets.

5. Trade policy: tactical realignment, not isolationism

Kaplan's most interesting perspective tariffs, which he believes are a transitional mechanism rather than a long-term doctrine. Kaplan stressed that the administration wants:

• "Fairer" trade terms,
• Reshoring of strategic industries,
• Bilateral deals over multilateral arrangements.

He noted a deliberate effort to exclude close allies like Canada, Mexico, and low-cost developing economies from broader tariff regimes. China is seen through a tripartite lens:

• Adversary
• Competitor
• Necessary trading partner (esp. for intermediate goods, which comprise ~40% of U.S. imports)

Outlook: The administration is negotiating piecemeal but lacks a clear end-state. Delays in resolving bilateral trade deals contribute to business uncertainty and CAPEX hesitation.

C-suite sentiment: cautious optimism with a side of anxiety

The mood in the executive ranks started strong in 2025, especially around deregulation. However, uncertainty is creeping back in. Kaplan highlighted:

• Executives are unusually glued to the news cycle,
• Capital allocation is being delayed due to unclear outcomes,
• SMBs are especially vulnerable, with few strategic levers and rising costs from disrupted supply chains.

What CEOs Need: Clarity on USMCA outcomes, resolution with Canada and Mexico, progress on Japan negotiations, and more predictable trade policy execution.

Final thought

Kaplan’s remarks reflect a recognition of the administration’s attempt to simultaneously tackle long-standing structural issues (debt, regulation, trade imbalances) with aggressive, often contradictory policy tools.

For investors and allocators, the key is to filter rhetoric from realism and to watch for lag effects in labor, trade, and productivity data.