Skip to main content

Cookies and Privacy

We use cookies to improve your experience on our website. To find out more, read our updated Cookie policy, Privacy policy and Terms & Conditions

 Trump in Alabama during victory tour Mark Wallheiser/Stringer

The International Barriers to Trump’s Economic Plan

With Republicans holding majorities in both houses of Congress, US President-elect Donald Trump should have a relatively clear road ahead to implement his domestic economic agenda. But if Trump is to deliver the high growth he has promised, he will have to overcome external barriers as well.

DUBAI – US President-elect Donald Trump should have a relatively clear road ahead at home for the implementation of his economic program: with Republicans holding majorities in both houses of Congress, he seems likely to benefit from a break in the political gridlock that has paralyzed the body for the last six years. But the United States economy does not exist in a vacuum. If Trump is to succeed in delivering the high growth and genuine financial stability that he has promised, he will need some help from abroad.

Trump has established infrastructure investment, tax reform, and deregulation as central components of his strategy to boost the US economy’s actual and potential growth. Confident that his plan can unfold as intended, he has set ambitious targets, including GDP growth approaching 4% per year.

For now, investors seem to be pretty much sold. Under the assumption that the incoming Trump administration will ultimately refrain from triggering a trade war, they moved fast to price in optimistic prospects for higher real growth, higher inflation, and more money entering the financial markets. This has enabled the US Federal Reserve to begin to normalize its monetary-policy stance; in addition to a 25-basis-point interest-rate hike on December 14, the Fed has indicated that the pace of such hikes will accelerate in 2017.

We hope you're enjoying Project Syndicate.

To continue reading, subscribe now.

Subscribe

Get unlimited access to PS premium content, including in-depth commentaries, book reviews, exclusive interviews, On Point, the Big Picture, the PS Archive, and our annual year-ahead magazine.

https://prosyn.org/HCcCPT5;
  1. elerian122_Peter MacdiarmidGetty Images for Somerset House_bigdatascreentechman Peter Macdiarmid/Getty Images for Somerset House

    Adapting to a Fast-Forward World

    Mohamed A. El-Erian

    The world is going through a period of accelerating change, as four secular developments illustrate. Firms and governments must make timely adjustments, not only to their business models and operational approaches, but also to both their tactical and strategic mindsets.

    2
  2. roubini137_Mikhail SvetlovGetty Images_xi putin Mikhail Svetlov/Getty Images

    The White Swans of 2020

    Nouriel Roubini

    Financial markets remain blissfully in denial of the many predictable global crises that could come to a head this year, particularly in the months before the US presidential election. In addition to the increasingly obvious risks associated with climate change, at least four countries want to destabilize the US from within.

    8
  3. tharoor137_ Hafiz AhmedAnadolu Agency via Getty Images_india protest Hafiz Ahmed/Anadolu Agency via Getty Images

    Pariah India

    Shashi Tharoor laments that the government's intolerant chauvinism is leaving the country increasingly isolated.