The Trump economy has created a lot of losers among workers and consumers, yes, but also among businesses. Retailers are dealing with high tariffs. Auto and energy manufacturers have lost tax credits. Construction, agriculture, and other industries with significant immigrant workforces are having trouble retaining employees. Even health care, thought to be totally recession-proof, is showing cracks with the looming slashing of government funding and UnitedHealth’s troubles. A combination of sluggish hiring and higher inflation could tip the country into recession and have a spiraling effect.
But there are two winning sectors in the Trump economy: Big Tech and big banks. Due to positive trends and extremely favorable government treatment, banking and tech companies are absolutely soaring. And because they are among the biggest economic entities in the world and dominate the major stock indexes, the fact that more than half of the S&P 500 have reported declining earnings, as the Financial Times has reported, fades into the background.
Yet in an interesting twist, Wall Street and Silicon Valley are turning on each other, in an increasing number of high-profile regulatory fights. The future of the U.S. economy can be glimpsed in this battle between sectors that are not content to stay in their lanes and are taking their opportunity to essentially control the country.
Tech giants are using a vast storehouse of capital to build out data centers to power AI, a 12-figure capital expenditure that is propping up the U.S. economy almost by itself. The firms have more money to devote to this project because tax changes from the Big Beautiful Bill are delivering giant windfalls that tech is best positioned to take advantage of. Alphabet, the parent company of Google, is expected to take home nearly $18 billion in tax savings in this fiscal year alone, with $15.67 billion for Amazon, $12.45 billion for Microsoft, and roughly $11 billion for Meta. Beyond that, Donald Trump has become Big Tech’s personal lobbyist abroad, intimidating ostensibly sovereign nations to roll back digital services taxes and other regulations.
For its part, the financial industry is profiting from higher interest rates for their loans, and market volatility boosting equity income. The Securities and Exchange Commission (SEC) and the Consumer Financial Protection Bureau (CFPB) have been defanged, making compliance cheaper. Even investment banking has started to pop, perhaps reflecting a changing landscape where it’s easier to get merger deals done. Since changing course after the April “Liberation Day” announcement of tariffs, the administration has done whatever it takes to placate Wall Street, and happy investors translate to happy profits for banks and other financial institutions. Moreover, the Federal Reserve is weakening several capital rules that will allow financial firms to spin up more leverage, which can supercharge profits.
Wall Street and Silicon Valley are turning on each other, in an increasing number of high-profile regulatory fights.
But whenever you get two big kids together, the odds increase that they’re going to fight. And because both banks and tech companies are edging their way into the others’ businesses, converging within the crypto industry (which has claims on both sides), these flare-ups are starting to happen with increased regularity.
Exhibit A: For months, the Trump administration has hinted at an executive order that would help open up the lucrative 401(k) market to alternative investments. Private equity firms in particular have been salivating for years at the prospect of gaining access to the roughly $12.4 trillion in individual employee retirement accounts, even if they haven’t figured out how to work their high fee structure into traditionally low-fee offerings.
But there’s a bigger problem for private equity: That order could also allow retirement savers to trade crypto, which has left top fund managers angry. Those quoted in The Wall Street Journal say that adding crypto to the order would be a “distraction” that could tarnish private equity’s reputation, as if it’s so sterling. Read between the lines and you see that this is a competition for market share: Plan holders, particularly younger ones, would likely be more comfortable holding crypto than private fund assets, ruining private equity’s plan to corral hundreds of billions of dollars in savings. So they’re trying to exclude the competition.
Exhibit B: The CFPB issued an “open banking” rule last year that would make it easier for customers to move their money to competitors. The banking industry immediately sued to block the rule, and with the new administration putting the CFPB on ice and dropping regulations left and right, it seemed like it was doomed. But the Financial Technology Association (FTA), a collection of “neo-bank” tech apps, intervened to defend the rule in CFPB’s absence. It’s clearly Big Tech’s wish to get into payments and banking, bolstered by passage of stablecoin legislation that could enable non-bank firms to issue private currencies. And banks, sensing this, have started to charge heavily for access to consumer data.
Last week, the CFPB announced in a court filing that it would “substantially rework” the rule; this prompted a federal judge to pause the litigation over it. The FTA said it would “participate in the rulemaking process in good faith,” signaling that the fight has moved from the courts into Trump’s CFPB, where lobbyists will duke it out.
Exhibit C: Despite all the Wall Street friendliness, President Trump is readying an executive order that would impose penalties on financial institutions “debanking” customers for political or religious reasons. Discussing the order, Trump asserted without proof that JPMorgan Chase, the nation’s largest bank, discriminated against him personally in the wake of his instigation of the January 6th insurrection. These dubious charges of anti-conservative bias seem to be the only anti-discrimination work going on in the Trump administration. Though banks fought the order, they plan to comply with it now. (Incidentally, President Biden’s CFPB, under Rohit Chopra, punished banks for this conduct and proposed regulations to fight it.)
The primary group calling for these debanking restrictions are figures on the “tech right,” who have alleged discrimination against crypto firms in particular because of their personal beliefs. As former Treasury Department official Graham Steele explained, this is a conspiracy theory rooted in some banks making the reasonable decision to steer away from illicit financial schemes.
There isn’t a clear winner yet in these fights. Banks may have lost on debanking but could use it to blame regulators and get more relief from oversight. The open banking outcome is uncertain. And the 401(k) executive order hasn’t been released. But clearly these skirmishes show that Silicon Valley and Wall Street are the primary adversaries in the favor factory that is now our federal government. Trump benefiting one sector could have adverse consequences for the other.
The sparring is likely to continue. Tech clearly wants to move into payments. Wall Street clearly wants to ride the loosening standards of crypto and profit from it. It’s increasingly unclear where a financial firm ends and where a tech firm begins. Both sectors have virtually unlimited lobbying budgets and major contacts inside Trumpworld. And Trump is beholden both to Wall Street to maintain stock prices, and to Silicon Valley to continue the data center spending that is propping up the economy. It’s a jump ball.
More broadly, this pits the dominant economic force in the 20th century (finance) against the dominant force in the 21st (tech). Neither of them are willing to go to their respective corners and divvy up the spoils. In a monopolized economy, contentment is rarely a feature of the monopolists. We’re seeing the stirrings of a battle, but the warfare will only escalate from here.
The long-term resolution of this lies in diffusing the immense power of these two sectors and getting the public at the table where policies are made. But in my time following Congress, I’ve seen many fights rooted in mediating between powerful corporate interests. And because of the stranglehold corporate America has over our government, sometimes these are the only fights that can yield any scraps of benefits for ordinary people, in those moments where the interests of one side of the fight manage to line up with the public’s.
It’s sad that siding with a bank or a tech firm can lead—possibly—to some of the better opportunities for policy wins in the near future. But that’s life in the age of corporate power.