For his first week in office, President Trump has set a tone that represents a very large shift from previous political norms, heartening those who yearned for a change from the status quo and alarming those who prefer stability. But what actually happened? Trump had a few press events with business and industry leaders. Trump’s executive order to bypass elements of the Affordable Care Act was a clear signal that he will shut it down, but given the Republican Congress, that was a virtual lock anyway. Trump also signaled that he was going to deny US membership into the Trans-Pacific Partnership and renegotiate trade deals one-on-one. The Muslim ban has caused a lot of confusion and court challenges. While these actions may be jarring to some, they should not surprise anyone who heard the candidate speak on the campaign trail.
Politico has a pretty good listing of the new administration’s actions during their first week: http://www.politico.com/magazine/story/2017/01/president-trump-week-one-first-administration-214699. Politico, naturally, focuses on immediate and long term political impact. That is important. In the long term, the effects of President Trump’s moral guidelines and how they are applied through his policies will be felt by all Americans. The branding of the new administration will ultimately impact our national reputation, identity, diplomatic leverage, political capital, and threat credibility.
However, in the short term, the economic impacts of last week’s executive actions are still minor. There were few actions that directly changed the underlying formula for wealth creation in our economy. There have been some signals in the past few days of possible actions that the new administration is considering. For instance, the administration floated the possibility of a 20% tariff on imports to pay for the proposed border wall between the U.S. and Mexico. Tariffs don’t require input from Congress to have a material impact; the President can, via executive order, impose tariffs against Mexican imports. Again, it’s only a possibility. Nothing material has happened for the short term, yet. For investors focused on the short term, there is only smoke, no fire thus far. However, if an aggressive trade war breaks out between neighbors (and hitherto partners), it could easily spread between other World Trade Organization (WTO) members and then you’d be able to see the smoke all the way in Canada.