• Investing
  • Stock
  • Editor’s Pick
  • Economy
The Significant Deals
Editor's Pick

Trumponomics 2.0 will be better for US than rest of the world, BofA says

by November 30, 2024
written by November 30, 2024

Investing.com — Trump administration’s proposed policy shifts—collectively termed Trumponomics 2.0—will largely benefit the US economy while posing challenges for other global economies, according to Bank of America (BofA).

The policy package, focusing on trade, immigration, fiscal measures, and deregulation, is projected to amplify US growth, inflation, and interest rates beyond current consensus forecasts. However, its effects on other nations, particularly China and the Euro area, are expected to be less favorable.

BofA notes that the anticipated policies include trade tariffs on China, tightened immigration controls, debt-financed tax cuts, and sweeping deregulation in key sectors like financial services and energy. These moves aim to stimulate US economic activity but could exacerbate the US current account deficit.

“Ironically, the described policy mix will not do much to reduce the US current account deficit, which responds to a macroeconomic saving-investment imbalance,” economists led by Claudio Irigoyen said in a note.

“Most likely, the current account deficit will widen as long as the rest of the world remains willing to finance it.”

While the US is projected to emerge as a beneficiary of Trumponomics 2.0, the ripple effects are expected to strain other economies. BofA identifies China and the Euro area as the most vulnerable to the resulting shifts in global financial conditions and trade flows.

The Euro area is grappling with structural challenges and weak demand, while China faces cyclical pressures compounded by property market struggles and youth unemployment.

“Instead of retaliating significantly, we expect China to undertake sizable fiscal easing to cushion the shock,” economists noted.

“Tariffs on USMCA members look unlikely. Overall, we forecast higher real rates, a strong dollar and lower oil.”

The impact on emerging markets (EMs) is expected to be mixed, BofA says. Nations like Mexico, Vietnam, and India could benefit from supply chain realignments triggered by US-China trade tensions.

Conversely, commodity exporters might suffer from lower oil prices, a dynamic influenced by uncertain production levels in Saudi Arabia and Iran.

“The fortunes of commodity exporters will depend on the trade-off between the negative tariff and interest rate shocks and the positive reflationary effect of potentially significant fiscal easing in China,” the bank’s team explains.

BofA also highlights risks tied to the policy trajectory, including potential trade wars and geopolitical instability. While a focus on pro-growth measures could elevate global output, aggressive protectionism risks triggering economic slowdowns.

“Hawkish US protectionist policies could trigger a full-fledged trade war if other countries retaliate in kind, potentially leading to a global slowdown,” BofA cautions.

“A significantly worse stagflationary scenario would entail a global slowdown in the US and the rest of the world coupled with the decision to significantly increase the US deficit financed with some sort of financial repression. Finally, a worsening of geopolitical tensions would add insult to injury,” it continued.

This post appeared first on investing.com
0 comment
0
FacebookTwitterPinterestEmail

previous post
Irish centre-right parties close in on re-election but likely need a new partner
next post
Jefferies: ‘Are we near the rebirth of new nukes?’

You may also like

China central bank conducts 1.7 trln yuan of...

January 27, 2025

Fuji Media, rocked by sexual misconduct allegations, says...

January 27, 2025

ECB president fears loss of central bank independence

January 27, 2025

European tech shares tumble as China’s AI push...

January 27, 2025

Futures slip as investors eye China’s latest AI...

January 27, 2025

Markets may be repeating the mistake of 2019,...

January 27, 2025

How billionaire Caltagirone could influence Italy’s banking M&A...

January 27, 2025

How Italy’s MPS went from near collapse to...

January 27, 2025

Analysis-To weather Trump, emerging market investors look to...

January 27, 2025

Chinese AI startup DeepSeek overtakes ChatGPT on Apple...

January 27, 2025
Fill Out & Get More Relevant News








    Stay ahead of the market and unlock exclusive trading insights & timely news. We value your privacy - your information is secure, and you can unsubscribe anytime. Gain an edge with hand-picked trading opportunities, stay informed with market-moving updates, and learn from expert tips & strategies.

    Recent Posts

    • Divided Fed proposes rule to ease capital requirements for big Wall Street banks

      June 26, 2025
    • Women’s Tennis Association extends media rights deal with Tennis Channel through 2032

      June 26, 2025
    • Bumble shares jump 26% as dating company plans to axe 30% of workforce

      June 26, 2025
    • Small-business AI use is lagging, but one firm is channeling Sherlock Holmes and knocking out ‘grunt work’

      June 25, 2025

    Categories

    • Economy (245)
    • Editor's Pick (3,646)
    • Investing (534)
    • Stock (6,426)

    Latest News

    • Divided Fed proposes rule to ease capital requirements for big Wall Street banks
    • Women’s Tennis Association extends media rights deal with Tennis Channel through 2032

    Popular News

    • Earnings call: Cango Inc. reported a total revenue of RMB 26.95 million
    • Taiwan stocks higher at close of trade; Taiwan Weighted up 2.27%

    About The Significant deals

    • Privacy Policy
    • Terms & Conditions

    Copyright © 2025 thesignificantdeals.com | All Rights Reserved

    The Significant Deals
    • Investing
    • Stock
    • Editor’s Pick
    • Economy