The latest election results in the U.S. may indeed mark a new era for the world. President-elect Donald Trump’s economic policies are likely to take center stage in his second term. Trump seems very likely to pursue the plans he promised during his campaign, including higher import tariffs and a major crackdown on illegal immigration. Accordingly, scenarios in which inflation may rise, and economic growth may weaken come to the fore. Policies toward economic growth, employment, and macro-financial stability, as well as more domestic incentives for high technology and manufacturing, are also anticipated.
Yet, it also seems like Trump’s historic comeback and his decisive victory means far more for the markets and the American corporatocracy. Business and tech leaders, American billionaires including CEOs of Amazon, Microsoft, Meta, Alphabet, OpenAI, Apple and others lined up to congratulate Trump on his election victory.
However, this is surely more than just being a decent gesture. Trump’s reelection means a lot more to all these business leaders. They all seem eager to be working with the new president and are looking forward to greater opportunities awaiting the U.S. economy. Indeed, the Wall Street elites sensed money and have prepared for Trump’s return much earlier. Despite Trump’s earlier criticism and threats against some of them, many had been seeking connection channels with him, even in the lead-up to the elections. After all, for some, the new Trump era is perceived as a new opportunity to regenerate American exceptionalism, a new era of innovation, productivity, ingenuity and creativity.
Investing in Trump
As a matter of fact, American billionaires, business and tech moguls have recently been increasingly interested in American politics and aiming to keep closer contact with Washington. Of course, all, solely for emotional reasons!
Yet, a hard reality at this point, most still depend on public subsidies or government support for their company’s success or to keep their wealth. No doubt, they aim to protect their contracts in the government or benefit more from the new era of privatization policies against any potential anonymity from the new American administration.
These American billionaires have recently even been able to donate limitless to political campaigns. And this is, again, with the hope of getting Washington’s support in existing or expected antitrust cases, having a say in prospective regulations or any other potential issues against their powerful tech empires. After all, personal data and privacy issues, market dominance or societal impacts are each increasingly a key concern within the tech industry.
However, these new efforts could also, the least, be considered as a new peace offering. Most of these tech leaders are certainly afraid of threats of retribution. Or they may even be aiming to be the next president! Who knows!
Nevertheless, market optimism, expected deregulation trends and other market-friendly policies are surely helping these businesses, as most of these company shares were also up recently.
Thanks to surging stock prices, most tech billionaires added tens of billions of dollars to their fortunes, even in just a day. The top 10 billionaires added $64 billion to their wealth, according to the Bloomberg Billionaires Index. The CEO of Tesla and SpaceX, Elon Musk’s fortune alone passed the $300-billion threshold. The other U.S.-based IT, chip and semiconductor producers have all gained.
What is expected of Trump?
Trump, as a rather aggressive Republican, will likely prioritize supporting growth with much more market-friendly, but often more protectionist policies. The fight against inflation may remain in the background and the risks arising from existing public debt will also grow.
In his first term in 2016, Mr. Trump prioritized keeping the economy alive with expansionary policies and easy credit policies. With its protectionist policies, it introduced new sanctions, quotas and customs regulations against economies in the U.S. that had large external deficits. Hence, economic development, together with regulations, subsidies and legal issues will likely take center stage again.
It should not be difficult to predict that increasing domestic production and raising import taxes will be priorities of the new period as well. Most likely, energy, technology and even the finance sectors will benefit from the new era's subsidies, as well as tax and credit practices.
Low taxes, lighter regulations, and higher tariffs in the finance, energy, and tech industries should benefit American billionaires and stimulate business sentiment. A non-interventionist stance and tariffs may lead to higher inflation, while the combination of higher tariffs, lower taxes and deregulation is likely to mildly reduce growth.
Cutting corporate taxes, decreasing Social Security spending, and subsidies to support productivity will attract the attention of large corporations. Other corporatism-friendly policies, tax cuts and relaxing financial regulations are also on the agenda. Business interests also include regulations, tariffs and quotas on trade with China.
Long love story?
It is also important to understand to what degree major business leaders in the U.S., led by Musk, will be affected by the new Trump era. Though Trump's poor relations with business moguls such as Jeff Bezos and Mark Zuckerberg may take a different turn when all these businessmen step back.
Nowadays, even those who backed Democratic candidate Vice President Kamala Harris or earlier critics of Trump 1.0’s policies and his role in the insurrection post the 2020 elections (January 2021) are kissing the ring. Business Roundtable, a nongovernmental organization (NGO) of CEOs and a powerful lobbying group has also congratulated Trump and his new team.
Meanwhile, although most high-powered tech executives are lined up to embrace the new Trump administration, most of their workforce is still considered to support the Democrats – Silicon Valley has historically leaned toward the left.
Nonetheless, today’s business policy and stance shift should not come as a surprise either. As a matter of fact, there was another similar policy shift (on the tech giants' CEO’s part) back in December 2016, when Trump won his first election.
These shifting positions are also part of the bigger strategy to be part of the new game or new era policies. Yet, Trump is still expected to take an anti-establishment and decentralized stance, an antitrust approach to Big Tech power consolidation, as well as being a pro-crypto and AI development candidate. Deregulations are expected to take the lead.
Meanwhile, many of these tech or business leaders were rather neutral in the lead-up to the 2024 elections. However, the wealthiest of them all, Musk, donated over $100 million (according to some sources) to Trump’s 2024 campaign.
Overall, though, the stock market surge and crypto market volatilities are all good signs of a positive market reaction to the new Trump era. The Dow and S&P 500 indexes registered their biggest one-day percentage gains in a while. The Nasdaq technology index and small-cap Russell 2000 have also rallied.
Republicans have captured the presidency, the House of Representatives and the Senate in the U.S. Therefore, they will be deciding all the new economic policies. The Oval Office will surely have a huge influence even over policies directly impacting the tech sector.
The hope is that a new era of closer political power and technological innovation partnerships will forge ahead! After all, during Trump 1.0, for example, there was a strong real economy and a dynamic labor market until the pandemic. However, during Trump 2.0, with extreme competition, both the U.S. and Chinese economies are expected to slow down to some degree.
