US Election Day 2024 delivered a clear message from the citizens of the USA, who ditched the ruling Democratic Party in favour of Donald Trump again. Post-election analysis indicates that the high cost of living and border control/immigration were two driving issues for many voters (topping a long list of other concerns).
The Republican Party “swept the board”
For the first time in 20 years, the Republican Party won
- the Presidency,
- the Popular Vote,
- control of the Senate, and
- control of the House of Representatives.
Along with its established control of the Supreme Court, this puts the Republicans in a position to drive policy changes that will affect not only the daily lives of American citizens for years to come, but will also reverberate across the globe.
Lowering prices (and improving employment) through tariffs?
Trump has pledged to implement tariffs to “encourage” global manufacturers to move production facilities to the US. However, this policy will require nuance as the cost of tariffs is ultimately born by the consumer, and moving production facilities by its nature only bears fruit in the medium to long term. If tariffs lead to an increase in the cost of goods hitting the US shores in the short term, there could be an inflationary effect which will exacerbate the cost-of-living crisis rather than reducing it.
Reducing red tape and slashing headcount – Twitter-style?
Trump has announced a Department of Government Efficiency is to be created and headed up by Elon Musk and Vivek Ramaswamy.
The intention is to reduce regulations as well as federal institution sizes and head counts. If it is successful, this could go some way towards addressing the budget deficit and total national debt. For the record, US total debt now hovers in the region of $36 trillion – a truly staggering figure.
Trump has said that he will avoid appointing lifetime politicians who are “self-serving and act in their own best interests” and instead is looking to appoint individuals who will be loyal to the best interests of the United States and her people.
Early effects for our markets in South Africa
The US dollar has strengthened following the US election results, the converse of which is that the rand moved from R17.30/US dollar to R18.10 within a matter of days. It is still early days in the course of this Presidency, however, and one must always keep in mind the rand is an extremely liquid currency and volatile at the best of times.
The wide swathe of states that voted “Red” makes it clear that this was not a marginal victory. It is now up to Donald Trump to deliver on his election promise of improving the lives of the American people. The next four years is bound to be interesting, to say the least.
Make an appointment with your Netto CERTIFIED FINANCIAL PLANNER® professional if you are curious about what the US election results could indicate with regard to your personal financial goals and current investment portfolio specifics.
By Gareth Leonard, CFP® CA(SA)
