This study intends to analyse the rise of Donald Trump to the presidency of theU.S. as a symptom of the economic aftershocks to the 2008 financial crisis atthe global and domestic levels. In response to the financial crisis and structuralshifts in the global economy, Trump is pursuing protectionist measures which arebeing legitimized domestically by applying exclusionary policies based on a logicof “us vs. them.” By focusing on Trump’s public speeches, U.S. National SecurityStrategy and budgetary documents, this study will explore how Trump’s intentionof “America First” resonates in the political economy and foreign policy plans ofthe U.S. It claims that the Trump administration, which faces a legitimacy crisisat home and abroad, will continue to be deeply affected by its policy decisionsconsidering, first, protectionism versus openness in foreign affairs and second,equality versus efficiency in domestic politics. The Trump administration may alsohasten the demise of the global system by its isolationist policies which encouragepolarization.KeywordsTrump, political economy, America First, international institutions, populism,legitimacy crisis.
In addition to Trumps intention to attract U.S. companies back into the country, the Trump administration will play with tariffs and other trade barriers in order to enhance domestic business. In a similar vein, imports from non-U.S. companies will also be restricted, as Trump hinted in his speech in Brussels, in May 2017, that the Germans are bad, very bad... Look at the millions of cars they sell in the U.S. Terrible. Well stop that.43 Recently, 117
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Trumps policies to alter the general course of imports were articulated in his proposal to impose a 25 percent tariff on steel imports and a 10 percent tariff on aluminium.44 As expected, the announcement sent a shock to the EU and other trade allies, who immediately threatened the U.S. by retaliating with their own weapon, trade barriers. Although the president tweeted, trade wars are good and easy to win, officials who are well aware of the upcoming dangers to the global political economy are working to alleviate the allies fears and calm down the president.45 Despite the Trump administrations intention to revitalize business capital spending the U.S., however, it is not clear whether Trumps presence will encourage or discourage investment in the U.S.
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Another strategy is to make the U.S. more attractive to investment by offering high incentives for domestic and foreign capital. If you want to invest in the U.S., Trump stated in his Davos speech on January 26, 2018, there has never been a better time to do business in America.46 Despite the Trump administrations intention to revitalize business capital spending in the U.S., however, it is not clear whether Trumps presence will encourage or discourage investment in the U.S. in Table 1: Trump Policies and their Possible Effects on Investment Policy Channel of Effect Evaluation Corporate tax cut or reform Enhance after-tax profits Unlikely to reduce rates as much as promised; impact on profits muted by loopholes; impact of higher profits on investment weak; may simply facilitate more corporate hoarding & dividend payouts Trade policy; end or alter trade deals, penalize imports
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Reduce offshore competition; motivate repatriation of investment May slow outward migration of manufacturing investment; uncertainty posed by supply chain disruptions; unlikely to change fundamental pressures of globalization Increase infrastructure investment Stimulate aggregate demand; improve productivity & transportation Major new spending (if approved) will accelerate aggregate demand; demand benefits partly offset by tax/user fee plans; focus of new projects may be narrow 118 Roll back energy and climate regulations Open energy investment opportunities; reduce energy costs Will allow major energy projects to proceed (e.g. pipelines, Alaska drilling); will reduce investments in renewables; energy prices not a major determinant of most investment Financial deregulation More freedom for financial innovation and speculation Measures will enhance financial profits but not real investment; will fuel speculative and housing investments more than real capital Monetary policy
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