The transition so far has been surprisingly smooth, especially compared to his first term. The speed of appointments and the clear direction suggest he’s focused on his legacy, seeking not just to appeal to fringe elements but to leave behind a strong economy. This approach could bode well for US economic policy. Separately, internationally, we’ve seen developments like the unblocking of the EU-Mercosur free trade agreement, which while not signed yet, is a significant step in countering US-China tensions and trade war threats. Similar bilateral trade agreements could help stabilize the global economy as the WTO struggles to stay relevant.
What impact might a Trump presidency have on energy markets?
Trump’s incentives align with maintaining low energy prices. His history and statements about OPEC suggest he’s not inclined to support US companies in restraining production. He would likely open additional federal lands for drilling, and with big companies now controlling the shale patch, the industry is much more agile and capable of scaling production up or down as needed.
How might Europe respond to its political challenges with Trump also returning?
Europe’s situation is precarious. France and Germany are politically paralyzed. Italy and even Greece seem more stable in some respects economically. Bond rates illustrate this shift, with Greece’s rates now more favourable than France’s for the first time in recent memory. How this intersects with Trump’s policies, especially on Ukraine, remains to be seen. Europe may face increased pressure to align with US energy and foreign policy agendas, complicating an already challenging landscape. What we’re starting to see in Europe, is a recognition and acknowledgement that you can’t just let bureaucracy grow unchecked without fostering other areas. Taking Germany as an example, the imbalance between government bureaucracy and the private sector is awful. France isn’t much different. The downside of current policies is the rise of extreme right-wing populist parties, and that isn’t a solution either. Europe doesn’t have the same luxury as the US, where it
can experiment with policy directions for four years, pause, and then refine its approach. Change has to happen - I just hope it doesn’t overshoot too far.