After his emphatic election victory, investors are grappling with the consequences of a Donald Trump presidency. Even though he will only be inaugurated in late January, he is already putting his stamp on things and moving markets. Trump wasted no time in threatening significant import tariffs: 25% on goods from Mexico and Canada, and an additional 10% on Chinese imports, with more levies potentially to follow.
Market reactions to the election suggest that investors believe Trump’s bark will be worse than his bite and that much of the bluster is a negotiating tactic. It remains to be seen how many of the more extreme campaign promises will be implemented. Understandably, many investors are looking back to Trump’s first term for hints about the economic impact of his return. However, there are key differences between 2016 and now.