Votes were cast for the US elections on 5 November 2024 with Donald Trump winning a second term as the president of the United States. One needs to consider the effects of any change in leadership in the US, but in this case even more so as the consequences of the changes are potentially far reaching. One of the main concerns is that President Trump takes the global economy down a more protectionist route by taking that stance with the US.
Protectionist measures are economic policies and actions taken by a country to restrict foreign competition and protect its domestic industries. These measures are typically aimed at shielding local businesses and jobs from international competition, but they can have broader implications for global trade. Before President Trump was elected it was thought that the main target of his tariffs would be China. His comments indicate a potential increase in tariffs of 10% above current tariffs on China, but he has also mentioned tariffs of 25% levied against Mexico and Canada. If countries retaliate it could lead to trade wars which have a number of negative outcomes. These include higher costs for consumers and harming the export industry. While this outcome is possible, it is also very likely that President Trump is opening the 'negotiation' with a strong hand, and the end result may be far less pronounced.
There is also the issue of inflation to consider. Over recent years the US has been focusing on reducing their inflation via a series of interest rate hikes. Lower interest rates are good for the consumer and the economy, and you can be sure that President Trump wants a good economy. While it can be argued that any president would want a good economy, for President Trump this would be at the very top of the list. Therefore, assuming he wants inflation controlled to bring interest rates down further is a fair assumption. A trade war would make this outcome more difficult to achieve which is why President Trump's comments on tariffs may represent his 'opening bid' and not his final assessment.
Outside the US economy there is much to consider. This includes US-China relations, the Russia-Ukraine war, Middle East dynamics, and Trump's comments regarding NATO members not receiving automatic support from the US. President Trump will likely have differing views to these issues compared with his predecessor, and how this will play out on the stage of global politics is unknown.
One area that the Trump's victory has clearly been good for is Cryptocurrency. Bitcoin was hovering below $70,000 pre the election and is now around $100,000 – a gain of over 40%. The Trump administration is the most Crypto friendly administration we have ever had, with President Trump appointing David Sacks as the White House AI and Crypto Czar.
While we were not expecting the next four years to be particularly calm, the election of President Trump adds more volatility to the global outlook. Volatility can cause big drawdowns, which we have a good track record of protecting against at 36ONE, but it also creates large opportunities, and we will be on the lookout for these as always.