November 2024

The American people have spoken by electing Donald Trump back to the White House. Trump joins Grover Cleveland as the only two American presidents to win two non-consecutive terms to the Oval Office. But the result has been met with concern by many global economies. Trump promised huge tariffs on imports throughout his campaign which suggests there could be significant changes following his inauguration on the 20th of January.

Is Trump A Man of His Word?

This is a unique situation where we are able to reflect on Trump’s first term as president. It spanned four years and hundreds of promises. A simple game of kept, compromised or broken will give us an idea of what is to come.

Obamacare: Back in January 2017 Trump promised to “repeal and replace” the “disaster” known as Obamacare. Most aspects of the Health Care and Education Reconciliation Act of 2010 are still in effect. (PROMISE BROKEN)

Great Wall: “I will build a great, great wall on our southern border. And I will have Mexico pay for that wall. Mark my words.” The wall was built but it cost more than US $16 billion and Mexico certainly did not pay for it. (PROMISE BROKEN)

Immigration: Trump said he’d suspend immigration from terror-prone countries like Syria and Libya. Imposed a ban on refugees from Syria and a 90-day suspension on anyone arriving from more than a handful of countries including Libya and Iran. (PROMISE KEPT)

Tax Cuts: Trump said, “Everybody is getting a tax cut, especially the middle class,”. Although there were more winners than losers due to his tax reforms, not every tax payer in every tax bracket received a cut to their taxes. He also planned to cut the business tax rate from 35% to 15% but only managed to drop it to 21%. (PROMISE COMPROMISED)

Trump 2.0

With respect to global economies and the APAC region in particular, Donald Trump made a substantial amount of promises throughout his lengthy campaign. These centred around trade, tariffs and foreign investment.

Tariffs: Trump has proposed a 10% tariff on all US imports and a whopping 60% on products made in China. Household appliances, furniture and apparel would be among the most affected with the likes of India, Bangladesh and Vietnam to potentially benefit if retailers shift their operations away from China. As a guide, the tariff would impact 90% of IKEA products and is certain to have an effect on global supply chains.

Trade: The president elect has every intention of reviving his ‘most favoured nation’ (MFN) policy. Under this principle, countries agree to treat one another equally with respect to tariffs and trade barriers. The US/China relationship was strained during his first reign and that MFN status of China will influence global trade.

Foreign Investment: Trump claims that raising import tariffs across the board could result in a surge in foreign direct investment. This would eventuate if foreign companies build manufacturing plants in the US with a view of avoiding tariffs and benefiting from a lower corporate income tax.

What Can We Expect?

Put simply, expect the unexpected. During his campaign and before making his way back into the Oval Office, the president-elect has already survived multiple assassination attempts, accused Haitian immigrants of eating cats and dogs, and called upon Elon Musk to lead a new ‘Department of Efficiency’. The Tesla share price surged 15% following the announcement and stocks overall rallied once the Trump victory was confirmed. It doesn’t end there either with his support for cryptocurrency and less regulation pushing Bitcoin to reach a new record high – surpassing US $90,000 for the first time.

Just like his first term, we will have to wait until after things happen to predict them.