Trump's Economic Policies: A Global Impact Before Inauguration

As the 2024 U.S. presidential election comes to a close, the global economic landscape is already feeling the effects of President-elect Donald Trump's victory. Despite not yet taking office, Trump's economic policies have sparked significant market reactions and raised expectations for the future. This article explores the potential implications of Trump's economic policies on global markets, focusing on stock markets, trade, inflation, and debt.



Stock markets have reacted enthusiastically to Trump's win, with the Dow Jones soaring over 1,500 points to record highs. Investors anticipate policies that generally promote economic growth, such as lower taxes and looser regulation for businesses. Goldman Sachs estimates that the largest U.S. businesses could see a 4% jump in their earnings if corporate tax rates are cut. However, the impact on global markets is not uniform, with potential winners and losers among companies that rely on imported products or materials, sell to overseas buyers, or sit in the middle of global supply chains.



Trump's trade policies, particularly his stance on tariffs, have also garnered attention. The president-elect has expressed his desire to boost tariffs on goods imported from China, Mexico, and Canada. Economists warn that these tariffs could lead to increased import prices and consumer inflation in the U.S. The Peterson Institute for International Economics estimates that reinstating expired 2017 tax cuts and imposing higher tariffs on imports could reduce post-tax incomes for poorer Americans by around 3.5% and cost a typical household in the middle of the income distribution about $1,700 in increased taxes each year.

Trump's immigration policies, including his plans to deport millions of undocumented immigrants, could also have significant economic implications. The American Action Forum estimates that around 11 million undocumented immigrants reside in the U.S., with about 6.5 million holding jobs. If Trump's deportation plans are implemented, this could lead to a substantial labor shortage, particularly in sectors like agriculture, hospitality, and construction, which heavily rely on undocumented workers. This could drive up wages for remaining workers and potentially increase inflation. However, the economic impact may be delayed by a year or more, as Rob Haworth from U.S. Bank Asset Management suggests, due to the time and resources required for mass deportations.



Trump's proposed tax plan, including the extension of the 2017 Tax Cut and Jobs Act and additional tax cuts, is expected to have a slight, positive impact on U.S. economic growth. These tax cuts are likely to be partly funded by revenues from new tariffs. Overall, these adjustments are expected to add roughly 0.2 percentage points to an already strongly growing U.S. economy in 2025-2026.

In conclusion, Trump's economic policies, even before his inauguration, have already sparked significant market reactions and raised expectations for the future. While the impact on global markets is not uniform, investors are anticipating policies that generally promote economic growth. However, the potential implications of Trump's trade and immigration policies on inflation and the labor market should be closely monitored as the new administration takes office. As investors assess the prospects for Trump's second presidential term, they should remain focused on policy changes and the resulting economic and market implications.