We had originally planned on a two-part series to explain the “truths” behind the actions that Donald Trump has undertaken in his short eight-week tenure, thus far, as president of the United States of America. We called his blueprint the “MAGA Pathway”. But we realised that we would miss out a critical third leg of Trumpianomics — no less important than tariffs and currency. That is, the need to deregulate to raise competitiveness and reduce the fiscal deficit for long-term sustainability.
Although implied and touched upon in the first two parts, we feel it needed to be highlighted to complete our narrative, hence Part 3 of Trumpianomics. It will also explain why we think US equities will outperform — and the US dollar will strengthen — and our investment choices of US banks as well as steel and building material stocks. Much of the effects from tariffs and currency on investments and growth will take time to deliver benefits to the US economy. But deregulation is likely to see more positive outcomes in the near term as we will explain in this article. Tariffs on imports are likely also to increase the gross margins for domestic producers, from both higher prices and capacity utilisation on the back of higher volume sales. As we wrote previously, contrary to what many economists and analysts see as disruptive, confounding and ill-conceived policies, Trump’s goals to Make America Great Again (MAGA) are well defined (see Diagram), which is to:
