Economic concerns with Trump 2.0 – Societe Generale
After the debate and an attempted assassination, former President Trump's prospects for re-election have surged. Furthermore, there is a growing momentum for a red-sweep. Instead of delving into the odds, we aim to answer several frequently asked questions about the extension of tax cuts, tariffs, and the independence of the Federal Reserve (Fed).
Trump raises uncertainty long ahead of elections
“The election outcome remains uncertain, but there is undeniable momentum building for Trump. Is "Trump 2.0" a term of redemption or a revenge term? Many find reassurance in the US economic and market performance during Trump's first term, at least until the onset of COVID-19. During that time, similar themes of tax cuts, tariffs, and Fed independence were prevalent.”
“Extending the tax cuts of the Tax Cut and Jobs Act (TCJA) of 2017 could potentially increase the deficit by $4.6 trillion over the next 10 years. Official deficit projections must assume that the tax cuts will expire as legislated. It's important to consider that, in terms of the effect on growth, allowing the tax cuts to expire would be akin to raising taxes by the same amount over the same period.”
“Trump levied tariffs in 2018 that raised fears of inflation. We re-examine the aftermath and offer some thoughts on prospects going forward. Also, in a Trump 2.0 we should expect the Federal Reserve’s independence to be tested, but count on Fed to remain focused on their mandated objectives until new any new legislation is passed by Congress.”
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FXStreet Insights Team
FXStreet
The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.
