By Tina Irgang
In a stunning upset, Donald Trump has defeated Hillary Clinton in the race for the presidency. The reasons for this outcome — and why so few polls seemed to predict it — will be parsed for months to come. For now, let’s focus on the future: What are the implications of a Trump administration for the U.S. and global economy?
Similar to the aftermath of the unexpected Brexit vote earlier this year, the stock market’s reaction to the election result was strong and immediate. “Sovereign bonds and gold shot higher Tuesday evening, while the Mexican peso went into near free-fall as investors faced the real possibility of a surprise win by Trump,” reports NPR’s Marketplace. “U.S. stock futures dived 5 percent.”
Before results were in, the UK’s Independent newspaper predicted an upset by Trump would cause the dollar’s value to slump. “A Trump win is also likely to damage confidence in other U.S. financial asset markets, something that will make it less likely the Federal Reserve will feel able to increase interest rates in December,” the paper adds.
There is still a great deal of uncertainty about the details of the Trump administration’s economic policy, given that the president-elect is a newcomer to the political scene. So for guidance, let’s look at some of the positions Trump has espoused throughout the campaign.
- Trade deals. On the campaign trail, Trump repeatedly said he would renegotiate the North American Free Trade Agreement (NAFTA), calling it “the worst trade deal ever.” According to the Trump campaign website, if renegotiation fails, the U.S. will withdraw from NAFTA. Trump also favors withdrawing from the Trans-Pacific Partnership, a trade deal supported by President Barack Obama that has yet to be ratified. Trump’s campaign says the president-elect will hire “tough and smart trade negotiators” to make new deals for American workers.
- China. Trump would “instruct the Treasury Secretary to label China a currency manipulator,” according to his website. He would also “instruct the U.S. Trade Representative to bring trade cases against China, both in this country and at the WTO” and “use every lawful presidential power to remedy trade disputes if China does not stop its illegal activities, including its theft of American trade secrets.”
- Job creation. President Trump would “create a dynamic, booming economy that will create 25 million new jobs over the next decade,” according to the campaign website. This will be achieved through “a pro-growth tax plan, a new modern regulatory framework, an America-First trade policy, an unleashed American energy plan, and the ‘penny plan.’” (For those not in the know, the “penny plan” calls for reducing discretionary government spending by 1 percent each year, excluding defense and the major entitlement programs, according to The Washington Post.)
- Cuts across the board. Trump’s campaign website pledges to cut taxes, “especially for working and middle-income Americans, who will receive a massive tax reduction.”
- Fair distribution of the tax burden. Trump also emphasizes that everyone will “pay their fair share” under his plan, but “no one will pay so much that it destroys jobs or undermines our ability to compete.”
- The wall. Perhaps the most well-known Trump position is his advocacy for building a wall to stop unauthorized immigration along the Mexican border.
- Americans first. Trump’s site states he would “prioritize the jobs, wages and security of the American people” and “establish new immigration controls to boost wages and to ensure that open jobs are offered to American workers first.”
- Controls on legal immigration. Trump would “vet applicants to ensure they support America’s values, institutions and people, and temporarily suspend immigration from regions that export terrorism and where safe vetting cannot presently be ensured.”
- Controlling the cost of college. Trump would “work with Congress on reforms to ensure universities are making a good-faith effort to reduce the cost of college and student debt in exchange for federal tax breaks and tax dollars.”
Tina Irgang is the managing editor of SmartCEO magazine and SmartCEO.com. Contact her at email@example.com