Decoding Trumponomics

Katie Martin (0:06)

Pushkin. He's back, and he's busy, and I'm not talking about Rob Armstrong. Donald Trump is the leader of the free world all over again, and he has a punchy platform of policies on the economy and on America's place in the world. This is still the number one issue for investors everywhere. It will throw up risks and opportunities, whether you're a have-a-go amateur investor or a big fancy hedge fund manager. So, week one, what have we learned? What do we know? Are we any closer to figuring out what he's actually going to do? This is Unhedged, the markets and finance podcast from the Financial Times and Pushkin. I'm Katie Martin, a markets columnist here at FT Towers in London, watching the news from the US with, let's say, great interest. Joining me from Trumpland are, from the Unhedged newsletter, Robert Armstrong and his younger, more glamorous sidekick Aiden Reiter. Team USA, how has your week been?

Robert Armstrong (1:05)

I think it's been great, man, as a journalist. This stuff is catnip.

Aiden Reiter (1:09)

I mean, I don't know, there hasn't been much to cover yet.

Robert Armstrong (1:11)

Yeah, but there's been a lot of noise.

Aiden Reiter (1:13)

Yes.

Robert Armstrong (1:14)

And it's fun, the noise is fun, and speculating about the noise is fun. And, you know, it's just, it's for journalists, it's going to be a great four years.

Katie Martin (1:22)

Yeah, I'd rather be on...

Robert Armstrong (1:23)

Or at least a great two.

Aiden Reiter (1:24)

I'm already tired.

Katie Martin (1:27)

I'm happier being on my side of the fence than I would be managing other people's money for a living, that much for sure.

Robert Armstrong (1:32)

Correct.

Katie Martin (1:33)

So, you know, he's said a lot in the campaign. He came up with a lot of ideas. They didn't all necessarily all make sense lined up against each other, but still, there was a lot of stuff hanging around. And the idea was he's going to get inaugurated and then we're going to get some clarity on what's actually going on. So tell me please, what do we have clarity on now?

Robert Armstrong (1:54)

Nothing.

Katie Martin (1:55)

Cool.

Aiden Reiter (1:56)

Well, we have clarity on some things, but not many things that have direct flow through to the market.

Robert Armstrong (2:00)

Yes.

Aiden Reiter (2:01)

So, he's pulled out of the World Health Organization. He has issued a raft of executive orders, freeing the January 6th rioters and a whole other bunch of other things. He's taken steps to end birthright citizenship, which actually could have some long-term implications for the market. But in terms of the big things that we talk about, tax, tariffs, immigration, we haven't gotten the full picture yet.

Robert Armstrong (2:22)

No. Well, what we got is some hints.

Aiden Reiter (2:26)

Yes.

Robert Armstrong (2:27)

So, hint number one from Donald Trump. Tariffs were not imposed on day one, which is something that he had said.

Katie Martin (2:36)

Which is interesting.

Robert Armstrong (2:37)

That is something that he had said he would do on day one. I will XYZ. Well, on day one, he issued a strongly worded memo and made some threats.

Aiden Reiter (2:48)

Well, he called for a memo.

Robert Armstrong (2:50)

He called for an extremely strongly worded memo.

Aiden Reiter (2:54)

But I will say, at least it seemed like he wasn't going to do a whole raft of tariffs. But then, literally in the last hour, in the 11th hour, he said, oh, and by the way, on February 1st, Canada, Mexico, let's say 25%.

Robert Armstrong (3:06)

Yes.

Katie Martin (3:07)

Yeah, so I don't get that. You know, his beef is with China, no? So why is he not talking about tariffs on China as loudly as he was, but why has he flipped this to Canada and Mexico?

Robert Armstrong (3:19)

We like Mexicans and Canadians here. It is a little, you know, what is that all about? Aiden?

Aiden Reiter (3:24)

There's a couple of potential, if we have to dive into the psyche here, which is always hard to do, there's a couple of potential interpretations. First of all, we should note that calling something for February 1st is more gradual than he said he would be. So he gets a little credit from the market there.

Robert Armstrong (3:40)

Yes.

Aiden Reiter (3:40)

But various people around him have said he does not wish to negotiate with China. He did not feel like in 2018 and 2019, they negotiated in good faith. So this could be the start of the negotiation round, and China might be the bigger hammer round. By giving Canada and Mexico 12 days, the Canadian and Mexican prime ministers have already been in contact with Trump. Theoretically, he's starting that one by one negotiation phase. And it would make sense to start with Canada and Mexico, because if your goal is to completely reshape world trade and completely reshape trade in a way that benefits the US, it's actually Canada and Mexico that are the larger US bilateral trade partners.