The Trump Trade Doctrine 2.0: Global Stakes

By Marcello Estevão and Jonathan Fortun

The re-election of Donald Trump has led to immediate yet cautious reactions across global markets, as investors brace for potential shifts toward tax cuts, deregulation, and aggressive trade policies. U.S. equities initially surged by 2 -3% following the election results, while the U.S. dollar appreciated by 3% against a basket of currencies, reflecting expectations of tighter Fed stance owing to the inflationary impacts of higher tariffs, lower immigration flows to the United States, and loose fiscal policies. Long- term Treasury yields, however, have risen only modestly, signaling (i) some concern about inflationary impact of Trump’s policies, while (ii) somewhat paradoxically, apparently some skepticism about the feasibility and full enactment of Trump’s proposed tariffs. In the end, tariffs are one tool in the broader economic policies that the Trump Administration appears to want, and it appears that investors are anticipating that tariffs will serve as a strategic tool in trade negotiations rather than as fixed policy.