Will Trump make America great again?

Will Trump make America great again?

After a thrilling presidential race, Donald Trump was voted president of the United States of America on November 8, 2016. It all began one and a half year ago, on the 16th of June when Donald J. Trump announced his candidacy. After a fierce battle with 16 other major candidates from the Republican Party, Trump won the bid. After getting the Republican bid he had to compete with Hillary Clinton, the top favorite to win this election. Following a campaign full of smear and personal insults, Trump won the elections somewhat surprisingly. In this article we will discuss what the impact of his presidency will be on several parts of the economy.

Stock market

First we will look at the stock markets. Analysts predicted a downfall of stock markets if Trump was to be elected president. However, in the last few days something interesting happened. Initially, stock markets all over the world dropped. But the last few days’ stock markets have resurfaced again, with the Dow Jones even hitting its all-time high. This was probably due to Trump’s election speech, in which he looked calm and spoke like a true president. Despite the rise of the stock markets, it’s still uncertain what the long-term effects will be. Investors need more time to make a good prediction of the impact of his victory. It is also not known what Trump’s cabinet will look like. Stock markets could react negatively on these important decisions.

Trade deals

In Trumps’ campaign he always talked skeptically about trade deals. For instance NAFTA, a free trade agreement between Canada and Mexico, which he said has lead to a decline in employment rates in the US. Other deals that may be threatened as well are TTP and TTIP. This could mean overall globalization would decrease. It could also mean more countries would implement protectionist policies, hurting free trade all over the world. This is not necessarily a bad thing, as it’s just speculating at this point what the effects would be.

Financial regulation & taxes

Mr. Trump has made it clear he wants to repeal the 2010 Dodd-Frank act, which was a response to the financial crisis in which businesses are more regulated. This could mean either of two scenarios: he only repeals the act, or replaces it with something better. The former could lead to a potentially bigger financial crisis. Trump’s tax proposal would see a lower tax income, the highest level being ‘only’ 35 percent. It has been calculated that the cumulative increase in federal debt might be as high as 25 percent of gross domestic product by 2026. Trump could, of course, spend less on social security and other things, but the question is if he will.

Investments

One of the core points in Trumps’ campaign was that he stated he would increase the state spending on infrastructure. The overall consensus is that infrastructure in the US has to be improved. It will also lower the unemployment rates, as Trump has stated he only wants workers from the US. The investment in US infrastructure would require a lot of money. Trump also wants to spend more money on defense.

National debt

The national debt will probably rise under Trump’s presidency, no matter what his policy will be. As seen in the graph we see an ascending line in the national debt since former president Bush Sr.  us_federal_debt_percentage_of_gdp-svgAn interesting question, which I cannot give an answer to in this article, is where is this going to stop? The US is almost on the national debt level of post-World War II, and it is only going to increase from here. If we take a look at Trump’s plans this mainly comes down to spending a lot of money, which would have a sufficiently negative effect on the growing federal debts.

Conclusion

It is still uncertain how Trumps’ presidency will affect the economy. On one side, it could hurt the economy, as stock markets could potentially plummet after more information becomes known. On the other side, the American economy could flourish, as Trump proposed plans to improve, among other things, infrastructure, which could lead to more jobs. Will America be great again? We cannot answer that question right now, as there is still a lot of uncertainty. We can say for sure that the national debt is going to rise, and maybe even exceed post world war II levels.

Personally, I think America will not be great again. Trump will probably create some jobs, as is normal if you increase spending on infrastructure. But the cost of these jobs will be high, and the level of national debt will rise. I think the lower income tax will lead to an even more divided America, as the poor will not benefit as much as the rich. The abandoning of trade deals could also have a negative impact on the global economy, thus also hurting America.

What do you think is going to happen to the (global) economy now Trump is elected president?

References

http://time.com/3948922/jim-gilmore-virginia-2016/

http://www.economist.com/news/united-states/21709921-americas-next-president-wants-pull-out-existing-trade-deals-and-put-future-ones

https://www.fxstreet.com/analysis/us-dollar-feels-the-trump-effect-201611111702

http://www.actionforex.com/analysis/daily-forex-fundamentals/trump-impact-exhausts-global-markets-20161111275513/

http://www.theatlantic.com/business/archive/2016/11/stock-market-trump/507299/

http://www.independent.co.uk/voices/president-donald-trump-dollar-failing-financial-crash-a7404816.html

https://www.donaldjtrump.com

https://www.ft.com/content/73262cb8-a72e-
11e6-8898-79a99e2a4de6

http://www.nrc.nl/nieuws/2016/11/09/wat-zijn-de-economische-consequenties-van-trumps-zege-5216503-a1531085



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