Published: Friday 20th January 2017
Read Time: 3 minutes
How Can Trump Make America Great Again?
Against all odds and expert predictions, Donald Trump is the next US President. Despite facing fierce competition from politics-veteran Hillary Clinton and even internally from his Republican party, Trump secured 306 electoral votes to Clinton’s 232. It is very interesting how wrong pollsters were.
All the statistical methods, phone polling and sampling indicated a near guaranteed win for Clinton. This shows a fundamental flaw in predictions since human emotion is not taken into account. For both Brexit and the US election, the population apparently voted on how they “felt” about the state of politics in the UK and US respectively – nothing mathematical or statistical.
Before assessing the future landscape of America, it is important to point out that by no means did Trump receive more votes than Clinton. In fact, the new estimates suggest that Clinton is likely to have secured 2 million more votes than Trump. However, due to the electoral college system, votes are given out per state to the candidate with more votes. Of course, if this were a referendum-style election, Clinton would have been the first female President of America. This can somewhat explain the immense protesting across the US.
Nevertheless, Trump won the election, and this cannot be discounted. This result demonstrates a situation similar to Brexit: the citizens of America are disgusted with present time politics and desire for a massive overhaul to ‘beat the system’ – a phrase often used by Trump to gather voters. But ultimately, this is what a democracy is for, and millions of Americans have spoken – by voting for Trump. The repercussions have already started. The Trans-Pacific Partnership (TPP) was set to become the biggest free trade deal in 25 years.
But in light of Trump’s win, the US Congress has decided not to approve the deal – one which Obama spent a lot of time supporting. However, Trump’s campaign words should be taken with a pinch of salt. There is a very high chance he backtracks on what he said and instead decides to amend TPP – rather than to outright remove it. In fact, this is more likely, bearing in mind that the TPP geopolitically excluded China – who are now rushing to offer an alternative free trade deal.
Ups and Downs in the Markets
On the markets side, it is interesting to see how shareholders are starting to price in Trump’s campaign ideas – even though they are not official. For instance, banks have been performing relatively well – US bank stocks were up around 5% last week. This is primarily due to Trump pledging to relax regulation that restricts banking activity – the 2010 Dodd-Frank Act. One particular target for the Trump administration could be the Volcker Rule – which prevents banks from making speculative investments.
On the contrary, the tech sector has seen the opposite, with stocks selling off. This is due to a potentially less interconnected America hampering international business, alongside a stricter immigration policy, which could reduce access to non-US skilled workers, something very crucial for an industry that survives and grows through creativity and innovation.
The question now relates to the future. Trump campaigned many extreme ideas and pledged to introduce many hard-line policies. World leaders are eager to see which policies will come to light in Trump’s official list and which concepts will be quickly swept under the rug. One famous example is the idea of banning all Muslims. However, shortly after being elected, any indication of this was removed from the Trump campaign website.
This begs the question of America’s stability. At the moment, there are anti-Trump protesters that voted for Clinton. This does not stop Trump supporters changing sides because he is not living up to what he promised. Both candidates already had record-low popularity results
Only time will tell if Trump will “Make America Great Again,” but as Warren Buffett said: Trump “deserves everybody’s respect.”