For Trump, the performance of the stock market is seen as validation of his own achievements, and he will not want it to stumble. He needn’t worry, at least for now.
History shows that financial and business deregulation is like rocket fuel for speculative stock market activity, and with more money in people’s pockets from tax cuts, we may be about to see a share price boom equal to that of the Roaring Twenties.
Character-wise, Trump has nothing in common with the presiding president of that time, Calvin Coolidge. The two are like chalk and cheese, the one bombastic and boastful, the other so taciturn and self-effacing that when he died, a leading commentator of the day asked “how can you tell?”.
Yet one thing that unites them is belief in a low-tax, small-state economy with a decidedly pro-business, hands-off approach to government.
It hardly needs pointing out that the Roaring Twenties ended in the worst stock market crash of all time, followed by a decade of economic depression.
Making the parallels seem more worrying still, Trump proposes the biggest package of tariffs since the infamous Smoot-Hawley Tariff Act of 1930, which set off a mutually destabilising chain reaction of trade retaliation and competitive devaluation.
There are other dangers in a Trump presidency too, most notably that of crony capitalism, where favoured billionaires get special treatment and are first in line for government contracts.
Already, Elon Musk’s unequivocal support for Trump looks set to pay off handsomely, with the value of Tesla crossing the $1 trillion threshold on the stock market on Friday for the first time since the depth of the pandemic. Those less than full-throated in their support during the election campaign can look forward to years of sidelined persecution.
In time, Trump’s closed border policies will not just be inflationary, both for the US and the rest of the world, but will also crimp the US’s currently enviable rates of productivity growth and innovation by limiting competition to domestic players only.
Trump draws his inspiration from the 1890 Tariff Act championed by Harrison McKinley. This imposed across the board tariffs of up to 50pc, and was seen at the time as a possible substitute for income tax. It didn’t work back then, and it won’t work today.
What it will do is poison the rules-based international order the US was instrumental in establishing in the aftermath of the Second World War and isolate the US from its natural allies in Europe and beyond.
Trump says he’s going to end inflation, but what does he think is going to happen to food prices once agriculture’s access to cheap migrant labour is cut off, or to American exporters when overseas jurisdictions take retaliatory action against Trump’s tariffs?
Last time around, he ended up having to subsidise US soya bean farmers as compensation for loss of once-buoyant export markets in China.
Maybe I’m old-fashioned, and my belief in free and open markets is past its sell-by date. But the planned mix of deregulation, tariffs, closed borders, tax cuts, Sinophobic measures and crony capitalism looks to me like an incendiary one.
An initial almighty boom seems fully baked in. So too does an eventual almighty bust.