Donald Trump's return to the White House: what effects on the economy?

How will Donald Trump's return to the White House affect the American and global economy? Luisa Lambertini, Rector of Università della Svizzera italiana (USI) and Professor of International Finance, spoke about it on Rete Uno news (RSI).

Donald Trump's election was positively received by numerous banks and the Japanese and European stock indices. "The U.S. stock market had anticipated Trump's victory, so I expect that there will also be a positive response in the United States when the stock exchange opens," commented USI Rector Luisa Lambertini (the prediction, made at 10h00 CET came true when the stock exchange opened in the United States, EN). "On the contrary, the Chinese index is expected to be flat or negative, as Trump's promised policies focus on tariffs and trade limits, particularly concerning China".

The forecast of Trump's economic policies seems to show a willingness to strengthen the dollar with the intention of reducing trade deficits. However, as the USI Rector explained, it is difficult to anticipate how the economy will evolve. "Reality and analysis show that tariffs and trade barriers have an unclear effect on trade deficits (i.e. the difference between imports and exports). Although assumptions can be made, predicting actual outcomes remains uncertain".

Soon, the Federal Reserve Bank (FRB), the U.S. central bank, will have to set new interest rates. Asked about the possibility that Trump's recent election might influence the FRB's decision, Luisa Lambertini said that, in her view, at least for now, the decision will be based on economic factors. "The decision on interest rates is influenced by forecasts regarding the inflation trend, which is currently at 2.1 per cent. Additionally, the U.S. economy is relatively strong, with an unemployment rate of 4 per cent and a recorded growth rate of 2.8 per cent. I believe the FRB will make its decisions based on this economic data and the forecasts its models generate. However, it should be noted that leadership changes could lead to adjustments in future decisions."

During the election campaign, Trump stated that he wanted to influence the FRB and US monetary policy. This threatens the central bank's independence, which, as Luisa Lambertini stated, all economists hope will not happen because "it is crucial that monetary policy maintains clear objectives that are not intertwined with political agendas. ".

The interview with Rector Luisa Lambertini on the Radio News broadcast (Rete Uno - RSI) is available at the following link (from minute 10.05, Italian only).