During his first passage to power, Trump was described as the President of the unfortunate, disappointed in the system, and those who had «understood nothing. This time, he has the leaders of the technology giants with him. He intends to make America a real fortress with them and will use all the levers to achieve this.
The Department of External Revenue
Trump announced two of the first measures: a state of emergency and armed guards on the southern border, closing access to US territory, and creating a Department of Foreign Revenue, supposed to collect the access fees that will pay foreign producers for access to the US market. One goal is to make it harder for foreign-paying companies to access the US market.
With the European and Asian economies struggling, it currently offers unique conditions. It is the only large market where, despite high interest rates, domestic demand remains, thanks to a healthy labour market, rising wages, and gains on the stock exchange by a population less cautious than others.
There are few alternatives to the US market at this stage, leaving Trump and his team in a strong position to negotiate with others. The announcement of new high tariffs further strengthens their position. In some cases, high tariffs may never be applied. However, they will certainly allow the U.S. to gain gains on other fronts, and they are not the only leverage Trump has.
Confident of his advantage, he has already informed Mexico and Canada of the need to renegotiate the USMCA Agreement once again, replacing NAFTA, which governs free trade in North America.
China is also in the crosshairs. But Beijing understands that with Trump, there is always a deal to be found somewhere, and its less ideological approach and more transactional is not likely to displease. Pragmatic and knowing to have certain assets as well as powerful allies in the entourage of Trump, the Chinese leaders are preparing for these negotiations, which they wait with a firm foot.
Then there is the «little China», a name found by Trump to refer to the fact that Europe also benefits from the United States. His complaints about the Old Continent are numerous. Compared to the standards of the agricultural sector, which make Europe refuse to import many American products on the Old Continent, compared to the German industry, which continues to export far too much to its liking to the United States, or even concerning the Irish tax system, which has led to the location of many US companies. Trump prefers his tax havens in Delaware.
On the European side, finding valid interlocutors won't be easy. Germany and France are economically weak, but also politically. Brussels is ill-placed, having bet all its chips on Kamala Harris, while his desire to regulate US technologies annoys. Does the European Union intend to investigate the dominant position of the technology giants and regulate their activity? The White House is threatening to leave NATO. Europe’s voice does not weigh heavily.
Uncertain macroeconomic impact
Making the US a fortress has a particular cost. A surge in legal immigration must compensate for the immediate halt of immigration and the expulsion of undocumented immigrants. Otherwise, the pressure on the labour market will be unsustainable, causing inflation to explode. The same applies to customs duties. If used, foreigners will contribute to the fiscal consolidation of the United States, and it is likely that, in the interests of competitiveness, many actors are willing to take on part of this additional cost to preserve access to this essential market. However, they will also push up the prices of imported goods and cause inflation. So, the method is to be used in moderation.
Another measure intended to promote balanced budgets is the end of disbursements related to the energy transition and social and inclusion programs and the exit of the United States from the Paris Climate Change Agreements. With the end of these aids and the obligation of all electricity in terms of the automobile, the United States changed course. It is time to produce as many hydrocarbons as possible (drill, baby drill) to provide the US economy with abundant and cheap energy to enhance its competitiveness and help limit inflation.
However, Trump is more than the president of hydrocarbons and old industries for this new mandate. He shares his enthusiasm for new technologies essential to establishing the position of the United States in the world. He announces with enthusiasm the investment in artificial intelligence, including the project «Stargate», with an investment of USD 500 billion.
At the same time, foreign players who wish to sell in the US will be encouraged to settle there to benefit from a more attractive business climate, a promising market, a lighter regulatory burden, cheap energy, and the use of fossil fuels. For many of them, the call from the US is irresistible. Trump has announced a new golden age for the US. He is far from sure of achieving this. But he will undoubtedly change the data. Everything leads us to believe that the United States will remain more dynamic than others and, therefore, unavoidable.
Just over eight years ago, during his first presidential campaign, Donald Trump announced that he would build a wall at the Mexican border – and that Mexico would pay for it. The whole world laughed. This time, such a result is much more realistic. Once isolated and president of the unfortunate and disappointing system, Trump returns to power in the company of influential leaders of technology giants and a team that knows what it wants and the levers to achieve it.
The best way to deal with this is through a dynamic domestic market and strategic independence from the US. Unfortunately, few countries are in this situation. Europe and the North American neighbours have neither. China has weak demand. As a result, other markets appear to be better positioned. Among them are Indonesia (where we are already investing) and India or Turkey, markets we look at with interest.
For better or worse, Trump is preparing to make the US a real fortress whose appeal cannot be denied. We continue to invest in it across all our portfolios.