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- Trumponomics - February 8, 2017
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- Four things you should know about the Dutch budget plans - September 30, 2016
Now that we have seen the first acts as Trump in his position as president of the United States, the time is now to reflect on his economic ideas and first acts. Obviously, it remains unclear how Trump will fill in the rest of his presidency, but we already are able to have a glimpse of what Trump is going to do the following four years.
Directly after being inaugurated, Trump has made steps to deregulation, notable regarding the Affordable Care Act – better known as Obamacare-, environmental regulation and financial regulation. Trump aimed for more competitive American firms, who hire more workers. He also gives lower priority than Obama to environmental protect and has proposed unlimited shale oil and gas tapping. From an economic sense, he might be correct in that deregulation and less environmental protection are able to give American firms a boost in competitiveness. However, it’s unclear what the consequences of less environmental and financial regulation are in the longer term.
Regarding taxes, Trump has promised to cut income taxes and cut corporate taxes significantly. It’s unclear how he will finance this loss of public revenue. Trump has also promised an infrastructure program.
With regard to trade agreements, the world might suffer more from the economic plans of Trump. Trump has announced to – and already has – re-negotiate trade agreements the US has concluded in recent years: NAFTA, TPP, and it remains very unclear how Trump will proceed with the negotiations of TTIP. The aim of these reforms is to bring back labor from foreign countries back to the US and While we, as economists, are well aware that this will also increase US consumer prices, this policy might also have negative effects for other countries in the world, even when not considering diminishing exports to the US. The US, being one of the two largest trading blocs in the world, have been the world hegemon since the end of the Cold War and can as such dictate the world the rules of the game of trade. Now that WTO-negotiations have made little progress recently, bilateral trade agreements, between two or a limited amount of countries, are expected to play an important role in fostering worldwide free trade. When the US are no longer willing to be an example for the rest of the world, this might mean the end of progress in global fostering of free trade. TTIP, for example, was expected to play as an example for trade agreements between other countries in the world. The future needs to show if, despite Trumps repeal of the most important US trade agreements, steps towards more free trade are taken.