In the early hours of November 6 local time, 78-year-old Trump defeated Democratic candidate Harris by a landslide, becoming the 47th President of the United States.
Financial markets reacted enthusiastically to the news, with 'Trump trades' continuing to fire on all cylinders. On the election day, the three major U.S. stock indices and Bitcoin set historical new highs, with the cryptocurrency market cap surpassing $2.6 trillion, and the dollar index reaching 105, the highest in nearly four months.
Historically, regardless of which party takes the White House, the U.S. stock market tends to rise, with the average gains of the Democratic Party being larger since 1945. However, Republican control may mean significant changes to this pattern. Of course, this depends on whether the Republican Party, to which Trump belongs, can gain control of Congress. The Senate has already been secured, and while control of the House of Representatives has not yet been finalized, the Republican advantage is clear. Polymarket data shows a 99% chance for the Republicans to win control of the House.
Trump's overwhelming victory comes at a critical juncture for American politics and the global economy. The next four years will be filled with uncertainty and challenges, having far-reaching and complex impacts across various industries.
"The golden age of cryptocurrency"
On the positive side, the 'real money' from crypto industry leaders has not gone to waste. Trump promised to make the U.S. the 'global cryptocurrency capital' and never sell the Bitcoin that the government currently or will hold in the future.
Trump also positions himself as a candidate supporting cryptocurrency, vowing to end the so-called 'persecution' of the industry and ensure that the U.S. creates more cryptocurrency-friendly legislation.
Crypto.com CEO Kris Marszalek said, "The future of cryptocurrency has never been brighter than today."
Matthew Hougan, Chief Investment Officer at Bitwise, stated in a memo on November 6 that Donald Trump's victory in the U.S. presidential election will catalyze 'the golden age of cryptocurrency' as the new government improves the regulatory environment.
For the past four years, the crypto industry has been in a state of paralysis. Given Trump's friendly attitude towards the cryptocurrency industry during the campaign, the new government is expected to offer support, such as changes in SEC leadership and the termination of 'Operation Chokepoint 2.0'.
If these verbal supports can be smoothly implemented, the crypto industry will welcome a regulatory spring and a wave of institutional investment. At that time, the industry will become more standardized, and innovation will flourish, with cryptocurrencies likely to truly integrate into the global financial system.
The butterfly effect of tariffs, global industry chain 'earthquake'
Trump has stated that if elected again, he would significantly raise tariffs on foreign goods imported to the U.S. For example, he proposed tariffs of up to 20% on foreign goods, 60% on Chinese imports, and even 200% on certain imported cars.
High tariffs will directly lead to a decrease in import volumes. Some economists warn that Trump's trade protection proposals will have a 'shock' impact on countries around the world, including the Eurozone and the UK.
Ahmet Kaya, chief economist at the National Institute of Economic and Social Research (NIESR) in the UK, stated that the UK may be 'one of the most affected countries' under such plans, with the economic growth rate expected to slow from a forecasted 1.2% to 0.4% by 2025.
UK Chancellor of the Exchequer Rachel Jane Reeves stated that the UK will 'strongly express' the necessity of free and open global trade to Trump. She said, 'The U.S. also benefits from free and open trade with us and other countries around the world, and benefiting from this open trade allows us to achieve a win-win situation.'
Tariffs are an important tool of trade protectionism. While they may bring some short-term benefits, in the long run, they often backfire. If Trump hopes to stimulate the U.S. economy through trade protectionism, not only will low-income countries find it harder to leverage export trade as a growth point, but the increased tariffs will ultimately be paid for by American consumers.
The 'chronic disease' of inflation worsens
The Democratic Party's defeat is actually a response to the long-standing grievances of the American public. In recent years, skyrocketing prices and housing costs, along with shrinking wallets and savings, have left middle and low-income voters dissatisfied. Voters have gradually lost trust in government officials, so-called liberal elites, and leftist media, which has had serious negative impacts on the Democratic Party. Trump's vow to 'Make America Affordable Again' became one of his winning cards.
However, investors are betting that Trump's tax cuts and tariff increases will push inflation higher and slow down the pace of rate cuts.
Andrzej Skiba, head of U.S. fixed income at BlueBay Asset Management of the Royal Bank of Canada, said, "If Trump imposes a 10% tariff on all global partners, it would be significant, as it could raise inflation by 1%. If inflation rises by 1% next year, we might say goodbye to interest rate cuts."
Peter Esho, founder of Esho Capital, stated, "The market is trying to figure out what will happen next, but for now, the market is digesting higher growth and higher inflation prospects."
One major reason for the continuous new highs in U.S. stocks this year is the expectation that the Federal Reserve will soon cut interest rates, as inflation is retreating to the target level of 2%. CME FedWatch data shows that the Federal Reserve will announce its latest rate decision on Thursday, and the market still expects the Fed to cut rates, but traders have already lowered their expectations for the number of rate cuts by the Fed in the middle of next year.
"Mass expulsion of illegal immigrants"
In recent years, American society has increasingly become divided, with the expulsion of illegal immigrants becoming a frequent topic exploited by some populists. They believe that illegal immigrants are taking jobs from locals, increasing crime rates, and adding to social burdens, successfully diverting public attention away from deeper issues like economic inequality and social injustice, and instead targeting vulnerable groups.
The policy of expelling illegal immigrants will further exacerbate social divisions and intensify conflicts between different ethnic groups and social classes.
Trump promised that one of the first actions he would take after taking office would be to mass expel millions of illegal immigrants, but this is not an easy task. While the president has certain powers over immigration issues, mass deportations face significant operational challenges.
Organizations such as the American Immigration Council estimate that Trump's expulsion plan will cost billions of dollars. If sectors like construction, hospitality, and agriculture lose a large number of workers, it could have a huge impact on the economy. Additionally, there are resource challenges; the U.S. Immigration and Customs Enforcement (ICE) must decide where to allocate its limited resources.
In summary, whether Trump can launch 'MAGA' 2.0, time will tell us the answer.
