These days the formation of a new government is underway. It's clear that candidates are being adapted to the solution of some or other tasks. What tasks are important and what will the efforts of the new team focus on? Being in the US, I tried to deal with this issue.
During the election campaign, Donald Trump made a number of promises that he intends to stick to. I think these promises will, to a great extent, determine the outlines and current faces of the Government.
During this presidential cycle, Donald Trump's position is much stronger. Republicans and Trump have achieved the Washington trifecta: a majority of Americans voted for Trump, the upper House has come under Republican control, the lower House, in a good likelihood, will remain in Republican hands. This will somewhat facilitate the realization of these promises.
In which directions will the main actions unfold?
Rates. Given that Trump sees tariffs as a universal tool for achieving goals, their role in this presidency will be higher.
During the election campaign, Trump promised to increase tariffs by 20% overall, for Chinese products by 60%. Even higher tariffs are possible for individual countries and goods.
I will only bring up 2 digits. Imports from China to the United States amounted to 536 billion in 2022. The average tariff for all imports is currently about 2%.
Obviously, the declared steps can bring potentially hundreds of billions of dollars to the treasury.
Taxes. Trump in the election race made many proposals to reduce the tax burden on businesses and citizens.
As part of the individual income tax, next year is an important year in preserving the tax deductions, preferences and credits introduced under Trump in 2017. Trump also proposed taxing tips, overtime, Social Security income.
A projected reduction in the corporate income tax (from 21 to 20% or even 15%) is already pushing markets up.
These issues are not within the President's area of competence and will be resolved at the legislative level.
Regulation and Efficiency.
Trump plans to lift Biden administration's energy and banking restrictions.
Trump is not so positive about green energy initiatives.
Trump dramatically changed his position by expressing support for cryptocurrencies. This is how they voiced the possibility of accumulating Government reserves in cryptocurrencies and forming more friendly regulation. As a result, we are watching a stormy rise in bitcoin.
The Efficiency Department was headed by Elon Musk and former Republican candidate Vivek Ramaswamy (on consultation basis). Whether Trump will dismantle the administrative system, which some Trump supporters, including Elon Musk, see as a serious deterrent, events will show. Another important task of the department, besides reducing administrative barriers, is to cut Government spending by $2 trillion.
Emigration. One of the more pressing issues. Millions of people have recently emigrated to the United States. And Trump, as part of his campaign, promised the largest mass deportation. The appointment of Tom Holen confirms the seriousness of the President's intentions. Halen has been tough on immigration and has already recommended Democratic governors to stay in his way.
The market is believing in promise. Shares of private prisons companies grew last week.
The Federal Reserve system. Knowing the relationship between Powell and Trump, I would like to suggest that Trump will try to replace Power until 2026. On the other hand, seeing how many tasks are looming over him, maybe he won't escalate the issue.
