After serving in the United States Army from 1955 to 1957, Macdonald took a job as an attorney with the Chicago law firm of Kirkland & Ellis.
He worked at Kirkland & Ellis until 1962, at which point he joined Baker & McKenzie as a partner.
Macdonald practiced law at Baker & McKenzie until 1974, when he left the firm upon being appointed Assistant Secretary of the Treasury (Enforcement, Operations, and Tariff Affairs).
From 1979 to 1981, Macdonald was an active member of the Republican National Committee, serving on its Policy Board, Economic Affairs Council, and as cochairman of its tax subcommittee.
In 1981, President Ronald Reagan named Macdonald as a Deputy U.S. Trade Representative under United States Trade Representative Bill Brock, and Macdonald served in this capacity until 1983, at which point he again returned to Baker & McKenzie.