What Trump's presidential election win means for the US economy

Donald Trump won the US presidential election, gaining 295 electoral votes to Kamala Harris’s 226. It also looks possible that the Republicans could win the “trifecta”: the presidency, Senate and the House of Representatives (which remains one to watch out for).

Trump is on track to win the popular vote too, the first time a Republican has won majority support since George W. Bush in 2004. In his victory speech, Trump celebrated his “magnificent victory” and promised a “golden age” for America. The dollar, US bond yields and stock futures jumped. So-called “Trump trades”, such as US bank stocks, electric car maker Tesla and bitcoin, also rose. Centrists who had predicted an easy win for Harris were not so perky.

How did Trump win the US presidential election?

Why did American voters do it? says Edward Luce in the Financial Times. “A large part of the story” is simply that a sufficient number of them “want what Trump is selling” – a stricter line on immigration, an end to globalisation, inflation and war, and to give “a middle finger” to the liberal elite’s “often self-parodying approach to identity, better known as wokeness”. To get that, they were prepared to overlook his flaws and the risk of giving him power.

The risk looks considerable. Trump made many worrying promises on the campaign trail, says The Times. He pledged mass deportation of illegal immigrants, thought to number in excess of 11 million; to end US involvement in the war in Ukraine; to hike tariffs to 10% on all imports and to 60% on everything from China; to have a say in the policy of the Federal Reserve; to introduce an oil policy, which he summed up as “drill, baby, drill”; to “fundamentally reevaluate” the purpose of Nato and get Taiwan to pay the US for defending it; and much more. The economic effects of the tariffs alone are “literally incalculable”. But as ever with Trump, it is hard to know what to take literally. The threats are at least in part negotiating tactics to win concessions from other countries.

What does it mean for the US economy?

Whatever he does, the US economy is “in for a wild ride”, says Mark Niquette on Bloomberg. Most economists predict higher inflation and slower growth as a result of his measures. But Trump boosters say the negative projections don’t account for the economic growth that his deregulatory agenda and plans to boost energy production will bring, not to mention his promise to make permanent the tax cuts he pushed through in 2017.

There will be winners and losers. Europe, a likely victim of the tariffs, is one loser – the euro fell on news of Trump’s win. The UK, too, should be worried. “We now face the prospect of an even more competitive US economy sucking in money from the rest of the world,” says John Stepek, also on Bloomberg. “That’s going to throw our own uninspiring growth into sharp relief at a time when there seems to be little interest in improving things.” “A new story is unfolding,” says Tom McTague on Unherd. “We are back in Trump’s world and we don’t yet know what he is going to do with it.”

This article was first published in MoneyWeek’s magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.