The writer is an fDi columnist and non-resident senior visiting fellow at New York University’s Center for Global Affairs

Following the US election, investors would be forgiven for thinking the country can live up to its reputation as the land of opportunity. Donald Trump in the White House, plus Republican control of both chambers of Congress, appears fertile ground for the approval and enactment of pro-business reforms and policies.

Here’s the best case scenario. The Tax Cuts and Jobs Act is extended past 2025 when its provisions start to expire, and the corporate tax rate lowered to 15% as Trump pledged while campaigning. Many also expect him to leave in place the Inflation Reduction Act and its billions in financial incentives, particularly given the bulk of that money has to date flowed to red states. 

If he also kept the Bipartisan Infrastructure Law and its $568bn for bridges and roads, and the Chips and Science Act, Joe Biden’s investment agenda would be left in place. Investors could be getting that, plus Republican-set taxes. Add to that minimal deportations and no real movement on tariffs, and good things would happen. There would be an ‘orange’ gold rush. 

However, we all know that Trump is unpredictable. For investors, that leads to uncertainty, a lingering death for ESG, bank capital requirements, and much more. And that’s before we get to his radical proposals for new trade policy. 

Mild or wild

When it comes to Trump’s policy path, it’s not so much where he will go but how far. The mild version of his policies is entirely different from the harsh. Deporting some illegal migrants would please the US populace. But deporting the country’s primary source of cheap labour would not. That makes inferring his actions from his utterances pretty hard. But there are some indicators as to whether his policies will be mild or wild. 

Republican control of both the executive and legislative is one example. The Donald is on the clock. He has two years before possibly losing the Senate in mid-term elections in November 2026, given that that would require just four seats flipping to the Democrats. Meanwhile, Republicans have the slimmest House majority since the 1930s. Not being able to run for a third presidential term, rank and file Republicans will be wondering what a post-Trump world looks like. If the GOP shifts back to the centre — or Democrats win control of one chamber of Congress — the full Trump agenda may be tempered, even blocked. If Trump manages to put forward much of his agenda in a single bill, as he’s hoping to do, that’s a sign Congress will support him in full. He will be king. If two bills, however, a mere prince. And princes do not rule well. 

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The politics of Maga are also creaking. Witness the recent shenanigans over H-1B visas, with some of Trump’s advisors like tech stars Elon Musk and Sriram Krishnan wanting skilled immigrants, while others in the party clearly do not. This indicates radically different visions of the US economy, and potential future fights. Disagreements in Trump’s circle — perhaps over Biden-era investment programmes, central bank independence or mass deportations — could reduce a prince to a princeling fast. 

Another hurdle for the Trump 2.0 pro-business era is monetary policy. Stock markets love him, and investor optimism sent the S&P 500 up 23% by the end of 2024 compared with 12 months earlier. But investors must also watch the Federal Reserve. If things get too bubbly, and there is the merest hint of consumer price inflation, the central bank will throttle Trump’s economy with an imported red silk tie. There is space to cut rates. The Fed wants the US economy to grow and is worried about the labour market. Having pulled off a soft landing in 2024, it will not allow a vertical take-off in 2025. Fed chair Jay Powell is the one man in the US who could usurp Donald Trump.

So there you have it. Does Trump in the Oval Office, and Republican control of the Senate and House of Representatives, really make the US the land of opportunity? Changes in Congress following the mid-terms, and a cautious inner circle and central bank, could see Trump’s power wane. All told, that might be a good thing. The real threat to US growth would be Donald Trump unleashed. Investors had better hope they’ll get only half of what he’d do if king.

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