Everything You Need to Know About Trump's Policy Preferences and Market Impact

As of November 6, according to reports from Guangming Daily, the counting of votes in the U.S. presidential election is still ongoing. According to calculations from multiple U.S. media outlets including Fox, Republican presidential candidate Donald Trump has secured at least 270 electoral votes, which is expected to lock in his victory in this U.S. presidential election. So, what are Trump's policy inclinations? How significant will the impact of policy implementation be? And how will major asset prices evolve? This article aims to analyze these questions in detail.

1 Trump Likely to Secure Victory

Trump is highly likely to be elected. In our previous report "If Trump is Elected: What Impact?" we mentioned that the U.S. operates under an electoral vote system, where a candidate can win all of a state's electoral votes by securing a majority of the popular votes in that state, known as "winner-takes-all." The total number of electoral votes across the U.S. states is 538, meaning a presidential candidate needs to win 270 votes to be elected as the new president.

As of November 6, according to reports from Guangming Daily, the counting of votes in the U.S. presidential election is still ongoing. According to calculations from multiple U.S. media outlets including Fox, Republican presidential candidate Trump has secured at least 270 electoral votes, which is expected to lock in his victory in this U.S. presidential election. Additionally, according to the latest data from the Associated Press, in the seven key swing states (totaling 93 electoral votes) that are crucial for both parties, Trump is also highly likely to secure victory.

Moreover, the control of both chambers of Congress (the Senate and the House of Representatives) by the two parties in the U.S. is also a key factor affecting the subsequent implementation of U.S. policies. If the party of the presidential candidate can win control of both chambers, it will be very beneficial for the implementation and realization of its policies; conversely, policy implementation will face significant obstacles.

The U.S. House of Representatives has a total of 435 seats, which need to be completely re-elected every two years. The party that secures 218 seats will control the House of Representatives; the Senate has a total of 100 seats, with one-third up for re-election every two years, and the party that secures 50 seats or more will control the Senate.

As of November 6, the latest data from the Associated Press shows that in the Senate, the Republican Party has already secured 51 seats, which means the Republican Party has gained control of the Senate. In the House of Representatives, the Republican Party has a lead with 195 seats, while the Democratic Party has 176 seats, indicating that the Republican Party also has a very high probability of winning control of the House.

![](https://mmbiz-qpic.wallstcn.com/sz_mmbiz_png/ZAiciaUASphhr8dibb2dhuI3t0ibsTibjDs6aMnRsTkmWnOgxn8dLVz5gGdsHpBdpbHEtnPRHkYCsbicD8GW5YdbdC4g/640? After the election, what other key time points need to be focused on? According to the situation of the U.S. election, various states have successively announced the results, and the following important time points are as follows: from November 6, 2024, to December 11, 2024, states will successively certify the election results; on December 17, 2024, the U.S. Electoral College will cast votes; on January 6, 2025, the U.S. Congress will hold a meeting to count and certify the electoral votes.

The new president will be sworn in on January 20, 2025. Additionally, at the beginning of 2025, the U.S. debt ceiling will expire, which may be the first challenge faced by the new president.

2 Trump Policies: What Are the Tendencies?

In the campaign program announced on July 8, Trump once again shouted "Make America Great Again." Overall, the core focus of the program is on manufacturing, inflation, taxation, trade, immigration, security, environment, and social security.

Specifically:

In the field of manufacturing policy, Trump emphasizes bringing key industrial chains back to the U.S. and reshaping the U.S. into a manufacturing superpower. From the current situation, after the U.S. imposed tariffs on China in 2018, the trade deficit has not effectively improved. As of 2023, the U.S. trade deficit has expanded by nearly $300 billion compared to 2017, which means the U.S. still heavily relies on imported finished products.

In the field of infrastructure policy, Trump emphasizes vigorously developing infrastructure construction. Trump proposed a large-scale infrastructure plan of $1.5 to $2.0 trillion during his previous term, mainly to repair America's infrastructure, including roads, bridges, airports, seaports, and water systems. However, due to opposition from the Democrats, it ultimately came to nothing. Currently, Trump promises to build "freedom cities," establish monuments for "real American heroes," "demolish ugly buildings," and "make cities and towns more livable," etc. With Trump being re-elected, there is a high probability that he will continue to implement the large infrastructure plan.

In the field of tax policy, Trump advocates continuing large-scale tax reduction measures. For example, making the individual and estate tax cuts from the TCJA (Tax Cuts and Jobs Act of 2017) permanent; lowering the corporate income tax rate from 21% to 20% or 15% (possibly only applicable to domestic production); imposing a uniform benchmark tariff on all U.S. imported products, with a 60% tariff on all products imported from China; and taxing the endowment funds of large private universities Consider replacing income tax with tariffs; exempting tips from taxation, exempting social security benefits from taxation, exempting overtime pay from taxation; and expanding the child tax credit to $5,000, etc.

In the field of immigration policy, Trump is extremely strict. Trump advocates restoring all border policies from the previous term and stopping the release of all illegal immigrants into the interior; increasing penalties for illegal entry and overstaying visas; overturning the Democrats' open border policy; cutting federal funding for sanctuary jurisdictions; and prioritizing merit-based immigration, etc.

From the current situation, in recent years, the main contribution to U.S. population growth has come from immigration. According to the CBO, the net number of immigrants in the U.S. was 2.6 million in 2022 and 3.3 million in 2023. These figures are higher than the average of 900,000 per year from 2010 to 2019. The agency projects that immigration will reach 3.3 million in 2024 (after which it will slow down). In terms of population growth rate, net immigration contributed nearly 90% of U.S. population growth during the period from 2020 to 2024.

Moreover, since 2020, the increase in net immigration to the U.S. has mainly come from a significant rise in the number of other foreign residents. Among them, non-immigrants refer to legally admitted students and temporary workers; other foreign residents do not belong to legal permanent residents or non-immigrants, and the commonly understood illegal immigrants are included in this category.

In the field of artificial intelligence policy, Trump advocates for the development of artificial intelligence and relaxed regulations. Trump signed an executive order in February 2019 to launch the "American Artificial Intelligence Initiative," which focuses federal resources on developing artificial intelligence. In the last few weeks of his term in December 2020, he signed an executive order encouraging the use of "trustworthy" artificial intelligence in the federal government, and these policies have continued into the Biden administration. Currently, Trump advocates for the repeal of Biden's executive order on artificial intelligence ("Executive Order on the Safe, Reliable Development and Use of Artificial Intelligence," October 2023), claiming that the order hinders innovation in artificial intelligence.

In the field of cryptocurrency policy, Trump actively supports the development of Bitcoin and cryptocurrencies. At the Bitcoin 2024 conference, Trump stated that he would maintain the current U.S. government's Bitcoin holdings and develop the U.S. into the "cryptocurrency capital" and "Bitcoin superpower," claiming that the Biden administration's crackdown on cryptocurrencies and Bitcoin is misguided.

In energy policy, Trump emphasizes the development of traditional energy. For example, Trump advocates for the repeal of Biden's previous mandate on electric vehicles and the reduction of expensive and cumbersome regulations; by lifting restrictions on U.S. energy production and terminating the socialist Green New Deal, he aims to make the U.S. the world's largest producer of oil and natural gas; achieve energy independence for the U.S., and then become an energy leader, leading to lower energy prices, among other benefits.

3 If policies are implemented: How significant would the impact be?

If Trump is re-elected as President of the United States, how significant would the impact be if his policies are implemented?

From the perspective of policy fulfillment, Trump achieved a fulfillment rate of over 40% during his first term. According to PolitiFact, 23% of Trump's policies in his first term were fully realized, such as not cutting Social Security, raising tariffs on imported goods to the U.S., restricting illegal immigration, and withdrawing from the Paris Climate Agreement, among others. 22% of the policies were partially fulfilled, meaning there were compromises, such as the repeal of the estate tax, which actually only raised the threshold rather than eliminating it. 55% of the policies were not fulfilled, such as investing in U.S. infrastructure and restoring U.S. manufacturing, among others.

![](https://mmbiz-qpic.wallstcn.com/mmbiz_png/JP9UXaNvb6T0Z4pxfqMrxrUO4nLsvo9egGf4Hic1FVnO5m4YntLib8F0AbHdW0CvhkapvDkWf5al7u2J7cLfEFog/640? From the perspective of the new round of policy assessment:

Regarding tax policy, Trump may bring about a new round of fiscal expansion. According to estimates, the tax and spending proposals from Trump's team will, on one hand, increase the U.S. structural deficit by $5.8 trillion over the next 10 years; if considering the dynamic effects of economic feedback, the final deficit will increase by $4.1 trillion.

On the other hand, the U.S. economy will see growth in the first half of the first decade, but by 2034, GDP will decrease by 0.4 percentage points, and by 2054, it will decrease by 2.1 percentage points.

In addition, Trump's fiscal and tax policy proposals will benefit many groups, among which the households in the top 95-99% income bracket will see the largest income increase, with a projected increase of 3.7% by 2026; while the lowest two income tiers will see increases of 1.4% and 1.8%, which are relatively lower than those of the middle and high-income groups.

Regarding trade policy, Trump may initiate a significant tax increase policy. However, raising tariffs is unlikely to change the U.S. trade deficit situation and could be detrimental to U.S. economic growth and inflation relief. If implemented, it will significantly increase the risk of stagflation in the U.S. economy On one hand, since the onset of the China-U.S. trade friction in 2018, the scale of U.S. imports from China has begun to decline. As of 2023, the U.S. imported approximately over $420 billion worth of goods from China, which is lower than before the pandemic in 2020. The most affected items are primarily those subjected to a 25% tariff.

However, as we pointed out earlier, although the U.S. trade deficit with China has narrowed, its overall trade deficit continues to expand, and the tariffs have only resulted in trade diversion.

On the other hand, most of the tariffs have been passed on to American consumers. As of March 2024, the U.S. government has collected over $233 billion in taxes from American consumers due to tariffs related to trade friction. Among this, $89 billion (approximately 38%) was collected during the Trump administration, while the remaining $144 billion (approximately 62%) was collected during the Biden administration. Moreover, over 90% of the collected taxes are attributed to the China-U.S. trade friction.

Furthermore, the current trade policies implemented by the U.S. are expected to impose $79 billion in tariffs, which will increase the average tax burden on American households by $200-300 per year.

In addition, the U.S. tariff policies will hinder employment, the economy, and raise inflation. According to calculations by TaxFoundation, the trade friction since 2018 will reduce the long-term GDP growth rate of the U.S. by 0.2 percentage points and decrease employment by 142,000 jobs. If Trump implements his proposed new tariff policies, it will add $524 billion to U.S. tax revenue annually but will reduce the long-term GDP growth rate by 0.8 percentage points and decrease employment by 684,000 jobs.

Research by ShermanRobinson (2022) found that if the U.S. raises tariffs by 10% on all trading partners, it would lead to a 6.7 percentage point increase in the CPI. A study by AlbertoCavallo (2019) also found that the tariffs imposed on Chinese imports are almost entirely passed on to U.S. import prices.[1]

We anticipate that Trump has a certain probability of further imposing tariffs on Chinese goods, with a significant degree of uncertainty regarding the extent of the tariffs. However, considering the impact on the U.S. economy and inflation, the results could also have a substantial impact on the U.S.

, the significant influx of immigrants in recent years has effectively alleviated the tight labor market in the U.S., positively impacting consumer spending and economic growth. Estimates suggest that the increase in immigration will boost real consumption growth by 0.2 percentage points in 2023 and 2024, and real GDP growth by 0.1 percentage points.

Therefore, if Trump enforces strict immigration policies, it could short-term impact the U.S. labor market and economy, leading to a decline in the U.S. economy and an increase in inflation.

We expect that Trump is likely to tighten border controls to manage the influx of illegal immigrants, rather than expelling a large number of existing illegal immigrants in a short time, which would have a moderate impact on economic and inflation expectations.

In summary, if Trump's policy package is implemented, it will increase the risk of stagflation in the U.S. economy, raise the risk of deflation in other economies, and bring significant uncertainty to the global economy.

4 Major Asset Prices: How Will They Evolve?

From the perspective of U.S. stocks, American tech stocks may continue their upward trend. Trump is likely to initiate a large-scale tax reduction plan, which would benefit U.S. corporate profits and sustained economic growth. However, Trump's significant tariff increases may have a negative impact on the economy and inflation. We expect that U.S. stock market volatility may increase in the near future.

Additionally, considering Trump's active support for the development of artificial intelligence and his lenient regulatory stance, there may be some support for the U.S. tech stock market; the medium to long-term market will need to observe factors such as the Federal Reserve's interest rate cuts and the performance of leading tech companies.

From the perspective of U.S. Treasury bonds, there may be upward risks to Treasury yields. On one hand, Trump may initiate a large-scale tax reduction plan, which would help boost the short-term economy and is unfavorable for further declines in inflation. On the other hand, Trump's significant tariff increases and strict immigration policies are also detrimental to the decline in inflation. We expect that under the influence of Trump's policies, there may be considerable upward risks to U.S. long-term bond yields.

From the perspective of the U.S. dollar, the dollar may still remain strong. On one hand, Trump's fiscal expansion policies are beneficial for boosting the short-term economy; however, tariffs and immigration policies will increase the risk of stagflation in the U.S. economy and raise the deflation risk in other economies. On the other hand, the rise in U.S. Treasury rates will widen the interest rate differential between the U.S. and other countries, facilitating the return of dollars and thus boosting the dollar. Exchange rates reflect the relative strength changes of the economic fundamentals of different economies, and we expect the U.S. dollar index to maintain a relatively strong position.

From the perspective of gold, the medium to long-term trend may continue to rise. A series of policies by Trump to make America strong again are likely to further differentiate the global monetary system and economic cycles. In our previous report "The Shift in Gold Pricing: Two Major Variables - Asset Allocation Series Six under Low Interest Rates," we pointed out that the differentiation of the global monetary system supports the gold purchasing behavior of global central banks, coupled with the differentiation of global economic cycles, which still provides certain support for gold prices. We expect that gold may continue to rise in the medium to long term.

In addition, Trump also supports the development of virtual currencies and traditional energy. We expect that virtual currencies represented by Bitcoin may also see some uplift; energy prices may be suppressed in the medium to long term due to increased supply and weak demand.

For our country, once Trump's policies are implemented, there may be a certain impact on industries and enterprises that rely on exports. From the last round of Sino-U.S. trade friction, the tariff rate on Chinese export goods was significantly raised from 3.1% to 19.3%. Currently, Trump has declared that he will further increase tariffs on products imported from China, which will disturb our external demand. In the short term, this will have a certain impact on our capital markets, especially for industries or enterprises with a relatively high proportion of overseas income.

However, the key to the trend of asset prices in our country still lies in internal policies. Even if there is pressure on external demand, our policies to expand domestic demand will actively respond.

The authors of this article: Liang Zhonghua S0850520120001, Li Jun S0850521090002, source: Haitong Macro, original title: "Impact of the U.S. Election Results?"