Standing on stage at the Great American State Fair, the carnival of July 4 celebrations held on the National Mall in Washington, Donald Trump declared that the United States was back.

“A short time ago we were a dead country,” the president said from behind bulletproof glass. “We were dead. Now we’re the hottest country anywhere in the world; we’re respected by everybody.”

Midway through his second term, Mr Trump insists his project to transform the United States in his image is well on track. But behind the scenes, as the 250th anniversary of the Declaration of Independence approaches on Saturday, the president is fuming.

Sources have described to The Telegraph an embattled atmosphere inside a White House consumed by crises, and the president’s unhappiness as he searches for scapegoats.

“He is in such a foul mood. He is so annoyed at White House staff because everything is going wrong,” a source close to the administration told The Telegraph. “The poll numbers are bad, and he thinks that everyone is doing nothing to fix it.”

Rising fuel prices caused by a lengthy and messy war in Iran have plunged Mr Trump’s approval ratings to a record low.

Sources close to the president say he is so anxious about looming midterm losses that he is weighing who around him is an asset – and who has become a liability.

Cabinet members have found themselves under renewed scrutiny from an agitated president, who allies fear could face impeachment for a third time if Democrats retake the House of Representatives and the Senate.

Markwayne Mullin, the new homeland security secretary, is already facing possible dismissal. Just three months after the former Oklahoma senator replaced the sacked Kristi Noem, allies of the president have turned against him.

They have accused him of being slow and “weak” on deportations after he suggested that migrants in the US on temporary protected status should seek permanent residence or leave.

The Supreme Court ruled last Friday that Mr Trump could end temporary deportation protections for hundreds of thousands of foreign nationals from Haiti and Syria in a major victory.

“Markwayne Mullin is doing nothing; he is totally weak. He has always been weak in the House. He is not MAGA,” one presidential confidant added.

However, one man has fallen out of favour with the president more than anyone else: Howard Lutnick. In a White House that prizes spectacle, the commerce secretary has mastered the art of the big announcement.

But behind the scenes, his habit of getting out in front of the president on announcements has left him with few friends in the administration. Staff have also privately complained about Mr Lutnick’s proximity to the president and the economic counsel he is giving him.

Frustrations began in March last year when Wall Street executives urged Mr Trump to take his commerce secretary off television, citing fears that he lacked understanding of tariffs and the economy.

Since then, Mr Lutnick has faced calls for his resignation after his name surfaced in the Epstein files, and provoked the wrath of the president about how much the Lutnick family was allegedly profiting from trade deals.

Some in the administration are also wary of his management style, which insiders described as brash and abrasive. Some cabinet members question whether he is the right person to deliver on the $18tn in pledged investments Mr Trump claims he has promised since announcing his tariff programme.

In Regime Change, a new book by Maggie Haberman and Jonathan Swan, two New York Times journalists, Mr Trump is alleged to have labelled Mr Lutnick, an old friend, a “pussy” for urging caution on his tariff agenda.

“Mr Trump tells Lutnick to get out of his way,” a source told The Telegraph.

If Mr Trump’s first term was defined by chaos, his second has been defined by a strict demand for loyalty. The US president’s current cabinet has been methodically picked to eliminate internal opposition. But there have been some dissenters.

Tulsi Gabbard, the former director of national intelligence, resigned from her post in May. She is thought to have fallen out of favour with the president for diverging from the administration on Iran.

And Pam Bondi, the attorney general, was sacked for botching the handling of the Epstein files after Mr Trump had privately grown increasingly frustrated with her performance as head of the Department of Justice (DoJ).

On the up

Not everyone is out of favour in the White House.

Scott Bessent, the treasury secretary, has become the most revered man in Mr Trump’s White House. The US president views his treasury secretary as a strong, highly effective asset, frequently valuing his counsel. Mr Trump, noting how popular Mr Bessent has become, has joked that he has “created a monster”.

It was Mr Bessent, insiders say, who first suggested Camp David as the location to get a distracted and disgruntled president to terms with a possible deal to end the war with Iran.

At the height of the war in Iran, even Mr Trump’s closest aides struggled to keep pace with his relentless updates on Truth Social, his own social media platform, which generated a lot of noise but no discernible diplomatic progress.

One source described how Mr Trump had become more irritable, and claimed he was sleeping less and writing unchecked posts as aides – who reportedly urged the president to rein in his social media activity – were unable to intervene.

At one point during the conflict, Susie Wiles, Mr Trump’s all-powerful chief of staff, is said to have expressed concern that aides were giving the president “a rose-coloured view” of the war.

Mr Bessent’s position with the president means he has been pivotal in putting policy in his in-tray, including one that has caused a diplomatic row like never before: the Chagos Islands.

It was over a late dinner in Davos that Mr Bessent turned the Chagos deal, and Sir Keir Starmer’s plans to hand over sovereignty of the islands, on its head.

The treasury secretary and Nigel Farage, the Reform UK leader, chewed over the details of Sir Keir’s plan to hand the archipelago back to Mauritius with disdain. By the end of the meal, Mr Farage was convinced that the Prime Minister’s carefully constructed agreement no longer had Washington’s backing.

“Nobody has a bad word to say about him [Mr Bessent]. He is hard-working, concise, and calm-headed in every situation. He is someone others go to for advice,” a second source close to the administration said.

“Few people are empowered,” a source close to the president said. “The only two guys who have the power to do anything are Rubio [Marco Rubio, the secretary of state] and Bessent, because they are competent.”

Mr Bessent is no pushover. He has built a fierce reputation for going toe to toe with other administration figures. In one well-documented standoff, he threatened to “kick the ass” of Bill Pulte, the acting intelligence chief.

His most high-profile dust-up was with Elon Musk, during the tech billionaire’s stint as Mr Trump’s government efficiency tsar.

The West Wing clash was spectacular, according to White House insiders, with an aide at one point stepping in between the two men. Obscenities were reportedly exchanged as Mr Bessent ridiculed the Department for Government Efficiency (Doge)’s work and Mr Musk dismissed the treasury secretary as a “Soros agent”.

Mr Musk was soon banished from the White House when he fell out with Mr Trump.

The president accused his former confidant of suffering from “Trump derangement syndrome”, prompting Mr Musk to respond by saying the president’s name was in the Epstein files.

The relationship seemed beyond repair. Yet among the coterie of tech bros, officials and advisers who accompanied Mr Trump to China in May was one familiar face: Elon Musk. His powerful AI and rocket software have proven to be of great value to the administration, though Mr Musk’s days in government are over.

Succession

The United States’ 250th anniversary also marks the halfway point of Mr Trump’s second term, and the talk has turned to who will succeed him. JD Vance, the vice-president, was once considered the heir-apparent but now finds himself fighting for the mantle alongside Mr Rubio, who was among the challengers for the Republican presidential nomination in 2016.

Mr Trump, who enjoys pitching his men against each other, asked Rupert Murdoch during a private dinner at the White House who of Mr Vance and Mr Rubio would be the better 2028 pick, according to claims in the recent Regime Change book.

The media mogul was notably more effusive about Mr Rubio, the authors said. He had privately tried to talk Mr Trump out of choosing Mr Vance as his running mate in 2024.

“Rubio is just holding steady hoping this Iran stuff will blow over and that he won’t get much of the blame for it, but he’s another one that needs to realise he’s not an imposing figure in any room, and he’d struggle to fill a gymnasium let alone a stadium,” a senior Maga figure said.

“Vance is apparently signalling that he doesn’t want to run on this admin’s record so far, and that he’s young enough to go somewhere else for four years and come back to an unpopular Democrat incumbent. He might be the smartest one of the bunch so far, but there are outliers that people aren’t considering, like RFK Jr.”

Mr Rubio faces an uphill battle to prove his Maga credentials should he run in 2028. The base has labelled him a “neocon” in the past because of his extensive history as a traditional foreign policy hawk. If he runs for office, voters will scrutinise his position on the war in Iran, something he has remained notably distanced from.

Mr Vance, on the other hand, will have to shake his image as the man who was at the centre of negotiations to make a deal to end the war, which so far seems to fall well short of the Trump administration’s objectives.