The United States: Organizing Trump’s Policy on Trade from the Republican Platform
2024-07-11
After the first televised debate of the US presidential candidates on June 27th, financial markets began to realize the possibility of former President Trump being re-elected. Based on the 20 articles of the 2024 policy agenda approved by the Republican National Committee on the 8th, let's organize the trends behind these Trump policies.
Key point (1) mentions "blocking the border to prevent immigrants from entering," and critical point (2) mentions "implementing the largest forced eviction operation in history." Although the feasibility of implementing radical policies is unclear, immigration control may lead to labor supply and demand tension, driving up wage pressures (i.e., inflation). At the same time, as population growth slows down, there is a risk of pushing down potential economic growth rates, which may bring about stagflation risks. In addition, in point (5), it is mentioned that "stop outsourcing and make the United States a manufacturing powerhouse." It is indicated that import tariffs on trading partners, including China, will be increased. This will lead to an increase in import prices, creating direct inflationary pressure.
Key point (6) stipulates that "significant tax reductions will be implemented for workers." It intends to extend the tax reduction measures that will expire by the end of 2025 (i.e., the 2017 tax system reform). These measures have driven up the profit level of American companies since 2017, increased dividend distribution, and formed a strong driving force for stock market investment. These measures may promote economic growth and increase tax revenue in the medium to long term. Still, if all projects are extended, it may reduce revenue by nearly $4 trillion over the next ten years, exacerbating concerns about widening fiscal deficits in the short term. Considering the above factors, if the financial market is aware that Trump may be re-elected, there is expected to be a rise in the stock market, a rise in the treasury bond yield caused by inflation and fiscal deterioration, and other reactions.
Key point (3) claims to "end inflation," but overall policy points are considered to promote inflation and may seek to suppress import prices through the appreciation of the US dollar. On the other hand, former President Trump stated in April that a strong US dollar could significantly impact domestic manufacturing and requested the Federal Reserve to cut interest rates, which could lead to a depreciation of the US dollar. Although it is currently expected to face the pressure of US dollar appreciation due to the anticipated rise in the yield of US treasury bond bonds, the impact of the promoted policies may change the effect of the exchange rate, which needs attention. In addition, point (13) states that "maintaining the US dollar as the world's base currency" indicates that it is unlikely to seek a policy of significant depreciation of the US dollar.
Key point (1) mentions "blocking the border to prevent immigrants from entering," and critical point (2) mentions "implementing the largest forced eviction operation in history." Although the feasibility of implementing radical policies is unclear, immigration control may lead to labor supply and demand tension, driving up wage pressures (i.e., inflation). At the same time, as population growth slows down, there is a risk of pushing down potential economic growth rates, which may bring about stagflation risks. In addition, in point (5), it is mentioned that "stop outsourcing and make the United States a manufacturing powerhouse." It is indicated that import tariffs on trading partners, including China, will be increased. This will lead to an increase in import prices, creating direct inflationary pressure.
Key point (6) stipulates that "significant tax reductions will be implemented for workers." It intends to extend the tax reduction measures that will expire by the end of 2025 (i.e., the 2017 tax system reform). These measures have driven up the profit level of American companies since 2017, increased dividend distribution, and formed a strong driving force for stock market investment. These measures may promote economic growth and increase tax revenue in the medium to long term. Still, if all projects are extended, it may reduce revenue by nearly $4 trillion over the next ten years, exacerbating concerns about widening fiscal deficits in the short term. Considering the above factors, if the financial market is aware that Trump may be re-elected, there is expected to be a rise in the stock market, a rise in the treasury bond yield caused by inflation and fiscal deterioration, and other reactions.
Key point (3) claims to "end inflation," but overall policy points are considered to promote inflation and may seek to suppress import prices through the appreciation of the US dollar. On the other hand, former President Trump stated in April that a strong US dollar could significantly impact domestic manufacturing and requested the Federal Reserve to cut interest rates, which could lead to a depreciation of the US dollar. Although it is currently expected to face the pressure of US dollar appreciation due to the anticipated rise in the yield of US treasury bond bonds, the impact of the promoted policies may change the effect of the exchange rate, which needs attention. In addition, point (13) states that "maintaining the US dollar as the world's base currency" indicates that it is unlikely to seek a policy of significant depreciation of the US dollar.