DDonald Trump inherits a great economy, the question is whether he will be able to keep it that way. Today, real GDP growth is around 3%, consumer spending and business investment are booming, the unemployment rate is near its lowest level in half a century, and inflation is rising. approach to the Federal Reserve's target.
The major risk in this happy picture is that Trump keeps his campaign promises, including: an increase in customs duties, a radical curb on immigration, an increase in the deficit and the end of the independence of the Federal Reserve. However, it is likely that the president will not respect the worst of his promises: on the one hand it would not be the first time that he has not kept his word, on the other hand the stock market would immediately make him understand that this This is not a good idea. Alas, the stock market does not give a backlash on issues such as climate change, racial discrimination, the rule of law or the financing of aid to Ukraine.
That said, it cannot be ruled out that Trump will largely or even entirely keep his campaign promises. He will undoubtedly have enough power to unilaterally impose on China the increase of at least 60% in customs duties that he promised. This increase, which would increase these rights to more than double their current level, would far exceed any form of sensible policy aimed at defending national security or trade rules. It would also accelerate the costly decoupling of the world's two largest economies.
Independence of the Federal Reserve
Even if it would not be to the taste of the Stock Market, it is possible that Trump clings fiercely to this narrow-minded and erroneous idea according to which the imposition of customs duties of 10% to 20% on all imports would make it possible to spit to the basin of foreign companies, helping the United States at the expense of the world. Such customs duties, however, would eventually be challenged in court and would create significant uncertainty in the meantime. The first losers in this affair, estimates the Center for Prospective Studies and International Information, a French think tank, would be the United States and China, but Europe and other countries around the world would also lose feathers. .
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