Donald Trump has won a decisive second term in the White House, defeating Kamala Harris by a greater margin than many had anticipated. His victory exposed a gap between public opinion and mainstream media and polling, which again failed to capture voters’ priorities. As Trump returns to office, significant economic shifts are already visible: the dollar has strengthened, bond yields have reached their highest levels since July, and US equity benchmarks have surged to new record highs.
Trump’s plans to lower taxes without the requisite cut in government spending would juice the economy, but widen the budget deficit and increase government borrowing. He may consider reducing civil service costs, possibly with the involvement of Elon Musk to streamline government operations. Meanwhile, promised tariffs could stoke inflation and reduce the scope for Fed monetary easing (with more on that today when the Fed concludes its November meeting).
Meanwhile, on the international stage, Trump has pledged to end the ongoing wars. While his strategies for de-escalation in Ukraine and the Middle East remain unclear, he is expected to pressure all sides toward negotiation. A successful approach could reshape global risk dynamics, though reducing US involvement would cut out economic stimulus via the defence industry.
For SA, The African Growth and Opportunity Act (AGOA) and South Africa’s relationship with the US could face challenges due to South Africa’s geopolitical stance, particularly its alignment with BRICS+ and positions on Russia and Israel. However, President Trump’s immediate focus is likely to be on more pressing domestic and international priorities, meaning AGOA may not face immediate scrutiny. This delay could provide South Africa with a window to navigate its geopolitical relationships without immediate pressure on trade arrangements with the US.