by Calculated Risk on 11/06/2024 02:51:00 PM

CR Note: I'll be assessing the impact of Trump's election on the economy, but we have to remember he doesn't do most of what he says. For example, in 2016 he promised to deport 10 million residents, but that never happened. He said he'd repeal and replace the Affordable Care Act; didn't happen. He promised an infrastructure bill. Nope.

But we do know he will increase tariffs and cut taxes on the wealthy.

A few excerpts from a BofA research note:

Tariffs:

We think tariffs on China are likely to increase significantly and in short order after Trump assumes office. The outlook for tariffs against other countries is less clear. In our view, Europe could also see higher tariffs, but Mexico and Canada should continue to enjoy free trade relations with the US.

Immigration and deregulation:

We do not have a strong view on the timing and extent of changes to immigration policy. Roughly speaking, we would expect weaker immigration flows to be a mild, persistent headwind to labor supply and GDP growth. On the flip side, we think broad deregulation, including in energy and financial services, will likely be a tailwind to growth. Increased energy production could marginally offset the increase in headline inflation from tariffs and fiscal easing.

Tariffs could derail the Fed cutting cycle:

We don’t expect the Fed to pre-judge the Trump policy agenda. But we think it will pause the cutting cycle if large tariff increases are announced, assuming the economy is still on solid footing.