President Trump Is Not Offering Hope for the Business World

The November 2016 election that saw Donald Trump a non-politician elected as the man who will succeed President Barack Obama as the next president of the United States of America was truly historic.

However, as this year comes to an end, a rally on the stock markets that followed the election was based on the expectations of minimized regulations, considerable tax cuts and pushing the fiscal stimulus.

But now, the honeymoon seems to be over as statements from ‘Trump’s camp’ had hinted on highly constrained trade policies. Investors are now busy analyzing the markets because the President-elect policy will definitely jeopardize the sweet period of post-election market rallies. Many are driven by these prospects. but with extra pressure by these regulations investors are wondering how the markets will hold up.

By opting for Peter Navarro as the chairman of the recently forged ‘White House National Trade Council’, indicates that Trump’s campaign promises to restructure trade deals with China and impose new taxes on almost all the imports are highly probable.

Navarro and Trump along with the new commerce senator, Wilbur Ross are busy working on a border negotiation tax. This new tax was already factored in House Speaker Paul Ryan’s tax reformation blueprint. But, experts at Deutsche Bank expects this new tax might send inflation way above the Federal Reserves level which is around 2% and initiate a 15% push in the dollar.

They also estimated that a 5% increment in the dollar will transform into almost a 3% negative income revision of the S&P 500, as well as a half point decrease in GDP growth. Notably, the dollar value has already gone up by more than 5% since the conclusion of the 2016 election.

Regulated trade policies should not result in a complete financial drag. “Although I do expect a centralized recession in the manufacturing sector, and smaller progress in factory throughout as well,” stated Brian Jacobsen a portfolio strategist with Wells Fargo.

Mr. Jacobsen also mentioned that the border tax might trigger a counter response and caused a mountain of uncertainty throughout global stock markets.

 

 

SOURCEHuffington Post
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