During his campaign, President-elect Donald Trump made many promises. These included various subsidies and financial help and now that he is days away from taking office, businesses are hoping for better days. Looking back at his history of tax cuts and deregulation, investors worldwide are keen on investing in the US. But, this does not negate the fears of the future in the business community.
During his first term, Donald Trump forced America First sentiments and used practices that helped the rich get richer. Some of these were deregulation and increased tariffs, resulting in trade wars with China, and delays in shipping, which disrupted the global supply chain. Situations like these pushed companies towards domestic manufacturing.
This increased demands of setting up factories in the Midwest, but there were no governmental plans for industrial establishment. The country had been observing a manufacturing decline for the last 20 years, and this did not change under the Donald Trump administration despite several promises. And such situations had pushed the economy to the brink.
Trump, who has lost more than 250,000 factory jobs, claims he “brought back our manufacturing jobs at a very high clip.”
Even before coronavirus, 2019 was one of the slowest years for factory job growth in a decade. pic.twitter.com/EYV53UGjjA
— DNC War Room (@DNCWarRoom) September 1, 2020
As per NY Times, the right-wing government never tasted long-term success as it hardly ever paid attention to the well-being of the nation and rather spent time making plans to appease the business class. Such plans led to the rise of class war and might have resulted in the onset of recession. Donald Trump had no clear idea of reforms or how to control grocery prices. If he were to go on in a similar manner with his new policies, he may very well push the country into a financial depression.
According to Nobel Prize-winning economists Daron Acemoglu and James Robinson, strong institutions are the foundation of a strong country. A populist leader usually puts pro-growth policies in place without considering all avenues. They dismantle regulatory bodies and different policies. Once such decisions are made, the businesses may lose the confidence and support required for long-term planning.
Donald Trump’s second term may bring back these aggressive practices. In turn, businesses will have no option but to work with skewed policies to remain afloat.
The general argument is that these policies will bring investors and though these plans and policies may look tempting at first glance, they may cause recession and financial instability in the longer run. Citizens waiting for a reduction in “egg prices” might have to wait longer for campaign promises to come true.
Egg Prices in the are up 37.5% from last year – US Bureau of Labor Statistics pic.twitter.com/9vr9plxFlC
— Evan (@StockMKTNewz) December 25, 2024
During Trump’s first term, many deregulations were ordered to reduce the cost. These resulted in a reduction of rules and operational barriers. Many companies experienced sudden profits due to such decisions, but they caused long-term harm to customers.
The direct result of these regulations was the crash of 3 major banks- Silicon Valley Bank, Signature Bank, and First Republic.
Silicon Valley Bank (SVB) Collapses!
1) It was a highly influential Bank for the Tech Industry for almost 40 years.
2) historically, it supported around 48% of venture capitalists in the US.Reasons for the Collapse
3) SVB placed lots of investors money in bond market. pic.twitter.com/ayeXSc5wuq— Prof. Isa Ali Ibrahim, CON (@ProfIsaPantami) March 11, 2023
The “Trump effect” is already showing as individuals like Vivek Ramaswamy and Elon Musk have been pronouncing an increase in the number of H1B visas. This is in direct contrast to the MAGA movement of keeping America First.
The reason top tech companies often hire foreign-born & first-generation engineers over “native” Americans isn’t because of an innate American IQ deficit (a lazy & wrong explanation). A key part of it comes down to the c-word: culture. Tough questions demand tough answers & if…
— Vivek Ramaswamy (@VivekGRamaswamy) December 26, 2024
Donald Trump’s term would definitely cause dramatic changes to the US business world as lower taxes will bring investors, and deregulations could also result in the growth of different industries. Irrespective, it is the long-term effect of these deregulations and cuts that one should pay attention to, remaining curious and vigilant to see if the market can turn around these policies’ long-term benefits.
