NEWS | Trump’s Triumph
The Eyes Have It
Kate Andrews on why nothing will be exempt from uncertainty
S
itting in the London Stock Exchange early Wednesday morning, neither I nor the many BBC producers
around me could peel their eyes away from the television, as Mr Donald Trump delivered his acceptance speech. The S&P 500 and the Dow had begun to tumble the evening before and, with the stock markets back open, it was not possible to report yet what trajectory they would be taking in the near future. But a sigh of relief was let out quickly; by close of day, the stock market was comfortably on the rise – the Dow up 1.40% and the S&P 500 up 1.11%. In retrospect this fluctuation
could have been expected, without cause for major panic. Markets hate unpredictability, and nearly no one – not the pundits, the pollsters, or the betting markets alike – saw a Trump victory coming that Tuesday night. The quick recovery suggests that it was the unknown factors around the outcome – not the outcome itself – that led stocks to temporarily nose dive.
But while the sudden dips and hikes may not have been related directly to what a President-Elect Trump means for America and the rest of the world, that doesn’t mean his economic impact won’t be felt by the markets later down the line. Trump’s economic proposals are
a mixed bag. Certain aspects of his domestic agenda – especially his line on corporation tax – could have a booming
6 DIRECTOR OF FINANCE
effect on the economy and the markets. If Trump were to cut America’s corporate tax rate more than in half – from 35% to 15% – as he has proposed to do, it could heavily inspire companies to bring back the estimated trillions of dollars sitting overseas. leading to re-investment in business, more jobs, and improved growth in the States. However, his line on trade could leave
the markets in a deeply unstable position. While Trump’s first interview since winning on CBS News’s 60 Minutes suggested he is already planning to roll back some of his more extreme policy positions, any major blow to the North America Free Trade Agreement (which he has been threatening throughout his campaign), could have a severe impact on the markets. Furthermore, if he starts to look beyond North America and bruises relationships with some of America’s largest trade partners – including China and the European Union – he could also cause markets to dive, while risking the lower costs of living Americans have acclimated themselves to. Trump’s historic and unprecedented win
places us in politically and economically undefined times. While we may see some economically beneficial policies come into play, nothing – not even the markets – will be exempt from uncertainty. Q
Kate Andrews is news editor at the Institute of Economic Affairs
dofonline.co.uk
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