Trump's commitment to raising import tariffs across the board will affect consumer prices
foreign investment flows and trade relations
With the popular vote and the electoral college in hand
Donald Trump has once again been elected president of the US
What many expected to be an election that would be won by a razor-thin margin has turned out to be a major sweep for Republicans
Trump has discussed his economic plans for his second term widely
albeit through varying iterations and levels of clarity
Now that there is certainty about who will occupy the White House for the next four years
what will Trump mean for foreign investment
emerging market fixed income portfolio manager at investment manager Ninety One
said: “The initial market reaction [to Trump’s win] reveals the expected policy mix to comprise more expansionary US fiscal policy
and increasingly aggressive trade policy towards global manufacturing centres such as Europe and Asia
“This has been reflected in the market trading with a reflationary/risk-on tone in US assets (higher treasury yields
stronger equity futures and a stronger dollar) while currencies such as the euro and Mexican peso have been the main underperformers as they are likely to find themselves in the crosshairs of trade policy.”
Trump has said that raising import tariffs across the board – 60% for China and 10% for all other countries – will be a net positive for the US
He says it will incentivise foreign companies to build manufacturing plants in the country
which would mean a surge in foreign direct investment (FDI)
he would extend the Tax Cuts & Jobs Act he passed in 2017
which saw him lower corporate income tax from 35% to 21%.
chief economist for Asia-Pacific at Natixis
explains that “Biden has attracted huge amounts of investment into the US […] but I think that Trump will attract even more because corporate taxes are going to be lower
There is also going to be a huge amount of repatriated profits into the US from American companies because of tariffs.”
Many experts have pointed out that this plan assumes that the US’ trading partners
rather than increase investment within US borders
might also simply retaliate with tariffs of their own
It puts into focus the dilemma that many countries will face; to acquiesce
or to leverage what trade power they have against new tariffs
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Herrero expects there to be less US FDI into Mexico as Trump “threatened
and maybe not to renew the US-Mexico-Canada Agreement”
which was the free trade agreement that replaced NAFTA
Mexico’s economy will “suffer” as a result
is whether Taiwan will be part of any deal
“meaning whether Trump will soften the position that Biden maintained on Taiwan in exchange for more exports or investments into China”
ING economists predict that the earliest these tariffs might be put in place is in late 2025 and that there “will be a phased introduction given the potential for significant economic disruption”
They add that China would likely be the first to feel the effects
This has alarmed major European allies facing sluggish growth, such as Germany and the UK. The National Institute of Economic and Social Research, a London-based think tank, has warned that UK growth could half if Trump goes through with his tariff plan
who are already facing an industry-wide crisis
might also be in danger as Trump recently told supporters: “I want German car companies to become American car companies.”
Even if the tariffs push foreign companies into sourcing products within US borders
the shift could take years and drive inflation for US consumers in the meantime
Another central prong to Trump’s plan is his aggressive immigration policy
where he promises to deport ten million undocumented people and restrict the entry of more
This will have major effects on the US’s capacity for growth
as undocumented workers are an important economic force in the country. Cutting off a source of qualified workers while the numbers of American-born workers decrease
chief US economist for macroeconomic forecasting consultancy TS Lombard
says that Trump’s win coupled with a working majority in the Senate will mean that “the rules that impact business investment by US firms elsewhere in the world will most assuredly bend to Trump’s wishes– a redirection into the US.”
“He is laser focused to redirect capital investment into the US
He is also more than accepting of foreign investment in the US
think in terms of Japanese car companies being cajoled into opening assembly plants in the US beginning in the late 1980s
The move has been a success story — these operations are now firmly embedded in the US economy with design offices and supply chains for assembly.”
“The reshaping of tax and regulatory policy so that firms invest in the US
the direction of their capital investments to the US.”
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She is 15 years old and wants to be a model
She is the only Roma I have met who spoke some English
so I could kind of direct her during the photo shooting
“I saw these women as the soul of these communities
They are the ones bringing life into those houses that otherwise look like being part of a film set,” Cuvelier said via email
he photographed mostly in five Roma communities: Buzescu
While the term gypsy is sometimes used pejoratively
the Roma people Cuvelier met told him they were proud to identify by it
Cuvelier aimed to communicate that pride visually
“A lot of Roma people are frustrated by the treatment they receive from the general public
and I feel this was a way for these particular communities to say ‘I exist too
She changed into several outfits over the course of an hour so that I could take different pictures of her in various parts of the house.”
“Three teenage girls on the street of Ivesti
They were wearing heavy makeup and funky socks
The house behind them has been built in three successive years
he didn’t have a translator and found communicating with Roma families difficult
he was stunned by its sheer size and its diverse architectural influences
“The architecture of the houses is a mix of a lot of influences and is definitely not minimalistic
Cuvelier found the women he met wanted their personal appearances to match the splendor of their homes
often putting on their best outfits and jewelry before posing for photos