emerging
Trump’s Economic Nationalism
The return of Donald Trump to the US presidency signals a renewed focus on economic nationalism, with potential implications for global trade, fiscal policy, and monetary policy.
Timeframe
immediate
Subcategories
Detailed Analysis
Trump's second term is expected to be marked by significant fiscal stimulus through tax cuts and increased spending, alongside a more aggressive trade policy characterized by higher tariffs. While the exact details of his economic agenda remain uncertain, his campaign promises suggest a focus on boosting domestic industries and reducing reliance on foreign trade. This approach could exacerbate existing protectionist trends, fuel inflationary pressures, and complicate the Fed's efforts to manage the economy.
Context Signals
Trump's election win does not alter our forecast for the immediate fiscal year 2025, when we forecast a $1.9trn budget deficit (6.4% of GDP).
Trump may consider adjusting implemented tariffs on goods with a high direct impact on consumers. In the past, he’s been amenable to the concerns of business leaders (and the performance of the stock market) when considering how tariffs should be implemented.
Trump could also consider replacing Fed Chair Jerome Powell before his term as Fed Chair ends in May 2026.
Edge
Trump's unpredictable policy decisions could create significant uncertainty for businesses and investors, leading to increased market volatility.
The potential for escalating trade tensions between the US and China could disrupt global supply chains and negatively impact global economic growth.
Trump's focus on economic nationalism could lead to a realignment of global alliances and partnerships, potentially creating new geopolitical fault lines.
