President Trump’s economic policies, also referred as “Trumponomics,” have been driving markets since his election in 2016. We saw a rally in stocks after President Trump’s election in 2016. There were hopes that President Trump would pursue a business-friendly agenda and boost US economic growth (SPY). President Trump didn’t disappoint on that front. The Trump Administration worked to lower regulations and managed to get the tax bill passed.
However, President Trump’s second year in office was marred with controversies about trade relations. President Trump targeted US trading partners in a slew of measures. China bore the brunt when President Trump imposed tariffs on $250 billion worth of Chinese goods. President Trump has also threatened to impose tariffs on automotive imports from the European Union. While US steel companies welcomed the Section 232 tariffs, US automakers like Ford (F) and General Motors (GM) have warned that tariffs could hurt the US auto industry. Last year, China (NIO) imposed tariffs on car imports from the US, which hurt Tesla (TSLA). On a positive note, the Trump Administration managed to renegotiate the NAFTA last year.
Right now, 2019 could be another crucial year for President Trump’s economic policies. As the race for the 2020 presidential election heats up, President Trump will likely add favorable trade deals to his report card. We could see the Trump Administration move forward on new trade deals with trading partners. President Trump has been tweeting about positive progress in the US-China trade talks. He has been somewhat cautious with his comments about China after the “Tariff Man” tweet led to a market sell-off.
The Fed could also go slow on rate hikes in 2019, which we’ll discuss in the next part.