Donald Trump is officially the 47th President of the United States for a second time, stirring financial markets and dividing economists apart.
Prior to election night, investors were hoping for a Trump win due to his favorable financial policies compared to Kamala Harris. Winning by popular vote, investors reacted quickly through a surge in share prices.
As reported by The Guardian, Trump's return to the White House brought a familiar economic approach that promises to cut taxes, reduce regulations, and affix heavy tariffs on imports, to support American businesses. However, economists warn that these will drive up prices for consumers in the US, and therefore, impact the global economy.
Read More: US Election Results Spark 'Investors Anxiety' Due to Stark Financial Policies by Harris and Trump
Trump Win's Impact on the Economy
As previously reported by VCPost, Trump's economic plan will focus on measures that will prioritize US industry and this will be done by imposing tariffs on imported goods and lowering taxes for business.
Economists aren't fond of these policies, stating that it could harm trade with other countries and lead to high inflation.
Now, The Guardian noted that Americans voted for Trump, partly due to the rising costs under Joe Biden's presidency although the outgoing US president has only been working under the policies set by Trump in 2016. Through higher tariffs, US consumers will soon realize that this will affect product and service prices, which would lead to reduced purchasing power. This is an impending inflation to happen and might affect the Federal Reserve's future actions on interest rates.
However, the Feds may hesitate to cut interest rates too quickly when this take place. With persisting inflation, the central bank will delay further cuts that will make borrowing more expensive for both businesses and individuals.
One positive outcome will come for the stock market since it will likely boost profits for US companies, especially those that will benefit from Trump's tax cuts. Politico shared that Wall Street is anticipating a rise in stock values due to expectations of increased corporate earnings, but again, could pass on to customers through higher prices.
Looking ahead, Trump's economic policies will make the US economic outlook more unpredictable. Some investors will see it as a welcome change, but others will worry about the potential for volatility and unintended domestic and international consequences.
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