What if Trump wins? Economic shocks could lie ahead for the US
What if Trump wins?
Until a few weeks ago, many Americans, and indeed people all across the world have been asking themselves the same question.
With the polls now favouring Hillary Clinton and the bookies already paying up it’s beginning to look unlikely, but as with Brexit, let’s rule nothing out yet.
A new report from Natixis says the future isn’t looking too bright if Donald Trump does become the most powerful person on the planet.
If Trump were to win the presidency, his programme is likely to lead to an economic decline, drops in the value of the dollar, and a whole lot of uncertainty from businesses – especially on Wall Street.
Read more: Clinton or Trump – whose economic policy is best for markets?
Trump, in short, wants to cut taxes, repeal Obamacare, reform trade to favour the US and restrict immigration.
Clinton wants to raise income taxes for the rich, raise the minimum wage, build on Obamacare and promote clean energy. Her plans are mostly in line with White House policy over the past few years, whereas Trump’s would see a considerable departure from the status quo and are likely to have some knock-on effects.
The report puts together a number of possible scenarios, and how they could affect the US economy.
-
If Clinton won with a divided or a Republican congress, as is most likely, this would lead to political gridlock. But this would provide economic certainty – GDP estimates are likely to remain the same.
-
If Trump won with a divided or Democrat congress, this would also lead to standoffs. The impact would be uncertainty in the economy, and the possibility of tariffs on foreign goods.
-
If Trump won with a Republican congress, it would lead to negative growth and higher inflation as a result of tariffs, tax and immigration reforms.
-
If Clinton won with a Democrat Congress, it would be positive for growth in the short run, but with higher inflation and tighter monetary policy.
Of course, whether he could push through the policies he wanted would depend on whether the party did well in the Congressional elections too. And with Paul Ryan, the republican leader in the House distancing himself from Trump’s comments as of late, this would certainly be tricky.
Read more: Obama tells Trump to stop whining
The most significant thing about a Trump win – even if it’s now seeming increasingly unlikely – is uncertainty. One thing we’ve learned from the Brexit fall-out is that businesses and the economy don’t like it, and it is sure to bite somewhere down the line.