Since writing our last Financially Speaking, the 2024 election has ended. We know elections can be sensitive and emotional, so we will not focus on the good or bad of the election results. Instead, we want to focus on the results and where we might expect things to go over the next few years. Of course, this kind of forward prediction has risks, but we feel it is worth considering what our newly elected officials might try to accomplish. We are always open to our readers’ ideas, criticism, or comments.
2024 Election Results
Before getting into what we think might transpire in time, we want to look at the election results and ascertain what they tell us. To start, some individuals, mostly Republicans, believe that the strong President electoral college victory combined with a President popular vote victory means that citizens have given Republicans a strong mandate for policy over the next few years. We disagree with that sentiment. If Republicans had a strong mandate from the electorate, then the majorities in the House of Representatives (House) and Senate would be far stronger. Yes, Republicans have a majority in the House, Senate and won the White House, but those majorities are small enough to suggest their election mandate is more limited than some believe.
We feel Republicans push their policy agenda too far at their own risk for the coming 2026 mid-term elections. On the other hand, the strong electoral college and popular vote wins for Donald Trump suggest he has a somewhat stronger mandate from the electorate and should expect a degree of patience in his policy choices, at least in the short term. Pushing his agenda too far has its own potential risks for the 2026 mid-terms.
The Idea of Change Mandate
Speaking of mandates, we feel one of the fairly strong mandates Trump gained in the election was the idea of change. Yes, change in the administration, but even change inside Washington. From our view Joe Biden is the epitome of establishment, non-controversial politicians. He just didn’t say or do a lot that generated public excitement. We don’t mean this as an insult, just our view of his persona. Trump, on the other hand, has talked extensively about wanting to change Washington and Government agencies. And given the low level of American support for our institutions, we feel this change message is part of what helped Trump win the election. We can see that this is starting to happen as Trump purposely chooses appointees with a history of skepticism about Washington and how the government works. Elon Musk and Vivek Ramaswamy would be at the top of this list. We think these choices will impact the government, and there may be some positive approval impact as the changes are illustrated to the public. However, we feel the Washington bureaucracy is quite thick, and substantial change will be challenging and take time. We do not think it will happen quickly.
Trump’s Administrative Appointments
Next, let’s talk about Trump’s administrative appointments and the reaction of Congress. We feel Trump’s relatively strong mandate will drive the Senate to approve the majority, if not all, of his appointees. This will help him get his agenda on track quickly, and that will have some early approval benefit. Executive orders will get Trump just so far, so his administration will be key to him trying to get early policy victories. Looking at Trump today, a recent poll shows Donald Trump’s approval rating at 54%, the highest he’s ever seen. Similarly, polls show his approval in his transition at 55%. Here again, these numbers suggest a reasonably strong mandate from voters.
Let’s see where things might go and the Trump policy promise list. At the top of that list is his promise to deport undocumented migrants. We feel Trump will pursue this early in his term and primarily focus on those migrants who are charged or accused as criminals. Deporting these individuals leaves much less room for pushback or negative press than the deportation of non-criminals. We feel Trump will try to reduce the kind of pushback he has seen from rights groups and the mass media, and focusing on deporting criminals will help with that. We feel that effort will take enough time and resources that he may never get to deporting non-criminals. He should be able to achieve a relatively fast and easy victory on this.
Tariffs on Imports
Next on this list might be his promise to add tariffs to imports from numerous countries, including Canada, Mexico, and China. We feel there is a fair amount of bluster in Trump’s comments on this topic. Yes, tariffs are a way, maybe even a good way, to try to get other countries to adjust their policies to be more favorable to the United States. We have seen policy movements in Mexico and Canada in response to Trump’s threat of 25% tariffs. Tariffs can lead to added inflation as costs rise and potentially get passed on to consumers. And considering that Trump was very vocal about the failure of the Biden administration to address inflation, we feel he’s going to be at least a little careful about this. Considering that Mexico and Canada are the top two trading partners with the U.S., the possibility of inflation using an across-the-board 25% tariff is too risky. The odds of new tariffs on China are very likely early in his term. China may absorb some added costs and not pass them on to consumers to keep their trade volumes higher.
Climate Regulations
Another promise frequently made was the idea of cutting climate regulations. In his first term, he pulled the U.S. out of the Paris climate agreement, and more recently, he has suggested overturning the Biden push for electric vehicles and perhaps the electric vehicle tax credit. We feel at least some of this will happen, and we think it will be high enough on his agenda that we will hear about it early. We think Trump will actively reduce regulations to allow fossil fuel companies to expand their operations. This will add to employment and help reduce fuel costs, which will be favorable for many voters. Yes, climate activists will be upset, and these actions will be directly connected to the pace of climate change. Trump will likely shrug that off. In addition, Trump will likely undo the electric vehicle tax credit, and he may try to explain that our current electrical system cannot handle significantly more electric vehicles, which we believe is true and seems never to get mentioned. These actions will get some favorable responses from voters but will trigger plenty of negative press.
Ukraine/Russia War
Our final promise to consider is his frequent reference to the Ukraine/Russia war and that he would end the war very quickly. Again, we feel there is a good amount of bluster here. This war is almost three years old, and neither Ukrainian President Volodymyr Zelenskyy nor Russian President Vladimir Putin seem very interested in negotiating cease-fire terms. Trump has had communications with Zelenskyy, but none that we are aware of with Putin. With Putin making gains in eastern Ukraine, it seems hard to imagine he will be willing to negotiate in good faith. Trump must decide how far he will push Ukraine to accept territory losses. Some territory loss is expected, but too much is an embarrassment to everyone who has supported Ukraine’s fighting efforts.
Is Trump willing to threaten Putin to get him more on board? That also seems unlikely. If all this turns out to be true, then ending this war will not be the cakewalk Trump has suggested. If Putin does not play ball, we feel Trump may embolden Ukraine to launch more missiles into Russia and even supply those missiles to get Putin to consider shifting his willingness. We think there will not be an easily negotiated settlement on territory exchange because Crimea is a territory Ukraine desperately wants, and Russia won’t give up. We do not feel this will be a victory for Trump early in his term. If ever.
Trump had plenty of other promises we could have gotten into, but we feel this is enough for a good starting point. And we’ve tried to select the promises most likely to be part of his early agenda. We’ll see how it goes and if he can maintain his reasonably positive approval rating. Time will tell.
All the best,
