"I am most pleased to nominate Scott Bessent to serve as the 79th Secretary of the Treasury of the United States," Trump said in a statement released on Truth Social on Friday.
"Scott is widely respected as one of the World's foremost international investors and geopolitical and economic strategists."
Wall Street has been closely watching who Trump will pick, especially given his plans to remake global trade through tariffs and extend and potentially expand the raft of tax cuts enacted during Trump's first term.
Donald Trump's pick for Treasury secretary has advocated for tax reform and deregulation. (AP PHOTO)
The choice came after days of deliberations by Trump as he sorted through a shifting list of candidates.
That list included Apollo Global Management chief executive Marc Rowan and former Federal Reserve governor Kevin Warsh.
Investor John Paulson had also been a leading candidate but dropped out, while Wall Street veteran Howard Lutnick, another contender, was appointed as head of the Commerce Department.
Bessent, who did not immediately respond to a request for comment, has advocated for tax reform and deregulation, particularly to spur more bank lending and energy production, as noted in a recent opinion piece he wrote for The Wall Street Journal.
The market's surge after Trump's election victory, he wrote, signalled investor expectations of "higher growth, lower volatility and inflation, and a revitalized economy for all Americans".
As the 79th Treasury secretary, Bessent will essentially be the highest-ranking US economic official, responsible for maintaining the plumbing of the world's largest economy, from collecting taxes and paying the nation's bills to managing the $US28.6 trillion ($A44 trillion) Treasury debt market and overseeing financial regulation, including handling and preventing market crises.
The Treasury boss also runs US financial sanctions policy, oversees the US-led International Monetary Fund, World Bank and other international financial institutions, and manages national security screenings of foreign investments in the US.
Bessent will face challenges, including safely managing federal deficits that are forecast to grow by nearly $US8 trillion over a decade due to Trump's plans to extend expiring tax cuts next year and add generous new breaks, including ending taxes on Social Security income.
Without offsetting revenues, this new debt would add to an unsustainable fiscal trajectory already forecast to balloon US debt by $US22 trillion through 2033.
Managing debt increases this large without market indigestion will be a challenge, though Bessent has argued Trump's agenda will unleash stronger economic growth that will grow revenue and shore up market confidence.
Scott Bessent will face challenges including managing federal deficits that are forecast to grow. (AP PHOTO)
Bessent will also inherit the role carved out by Trump's first Treasury chief Janet Yellen, the current secretary, to lead the Group of Seven wealthy democracies to provide tens of billions of dollars in economic support for Ukraine in its fight against Russia's invasion and tighten sanctions on Moscow.
But given Trump's desire to end the war quickly and withdraw US financial support for Ukraine, it is unclear whether he would pursue this.
Another area where Bessent will likely differ from Yellen is her focus on climate change, from her mandate that development banks expand lending for clean energy to incorporating climate risks into financial regulations and managing hundreds of billions of dollars in clean energy tax credits.
Trump, a climate-change sceptic, has vowed to increase production of US fossil fuel energy and end the clean-energy subsidies in President Joe Biden's 2022 Inflation Reduction Act.
Bessent, 62, worked for noted short seller Jim Chanos in the late 1980s and then joined Soros Fund Management, the famed macroeconomic investment firm of billionaire George Soros.
He soon helped Soros and top deputy Stanley Druckenmiller on their most famous trade - shorting the British pound in 1992 and earning the firm more than $US1 billion.
In 2015, Bessent raised $US4.5 billion, including $US2 billion from Soros, to launch Key Square Group, a hedge fund firm that bets on macroeconomic trends.
Key Square's main fund gained about 31 per cent in 2022, according to media reports, but firm assets have declined to approximately $US577 million as of December 2023, according to a regulatory filing.
