Breaking everyone's expectation to the 45th U.S. presidential election on November 8 last year, the Republican candidate Donald Trump have won. Many U.S. and overseas media outlets in shortly after the exit polls before the vote also saw strong candidate of State Hillary Clinton's presidential election. However, by an overwhelming gap Donald Trump won. The public, media, and the press and the world attended to Trump's pledges. Let's look at his main pledges.
1. Trade commitment (protective trade)
Protectionism is the state's control over trade, protecting and nurturing the country and the domestic industry until it has international competitiveness. There are measures such as imposing tariffs, prohibiting imports, allocating imports, subsidizing domestic industries, and the result of such government intervention is a decrease in imports of foreign goods. Trump aims to improve America's chronic trade deficit with protection trade and increase jobs in manufacturing and basic industries in the country. Apple's plants in China and Southeast Asia may be also moving to the United States. Trump has reexamined his country's trade control policy and international law, and announced that it will review the free trade agreement with other countries. It also announced that it would impose punitive tariffs on countries that arbitrarily manipulate exchange rates for their industries (Japan and China). Korea is one of the five largest trading partners in the United States and has a lot of trade balance from the United States. If Trump's strong protectionism is implemented, Korea will be the most affected country. The imposition of tariffs and the renegotiation of the FTA are likely to be a direct hit against Korean IT exports. Export's drop to the major conglomerates Samsung Electronics, LG Electronics and Hyundai Motor will be inevitable due to tariff bombs.
2. Immigrant Pledge
The number of illegal immigrants in the United States is said to be more than 10 million. Their workforce is roughly 5% of the United States, and most of them belong to the simple labor, construction, and cleaning industries that Americans are reluctant to do. Trump has said he will expel some two million illegal immigrants during the presidential campaign. He also said that he would punish and expel foreign criminals without any kind of tolerance. He also said he was willing to stop indiscreet immigration and receive only immigration to help the US economy. This pledge received much support from white Americans. Recently announced that it will invest 4 trillion won to build a border barrier with Mexico.
3. Economic Pledge
Trump has made an extraordinary commitment in the tax field. He said that it would cut the existing US corporate tax by 20 percent. Perhaps some of the companies that moved their headquarters to Europe or other countries due to the high taxes of the United States are expected to return to their countries. He also lowered the personal income tax rate, and abolished the inheritance tax. If tax reforms lead to deregulation and infrastructure investment, the growth rate could be higher. And Trump insisted a rate cut for the US economy. Because of his commitment to the United States. It will lower interest rates to reinvigorate domestic industries and raise US employment rates by bringing US factories back to the United States. But the Federal Open Market Committee raised 0.25 points in just three months after a 0.25 percentage point increase in December last year. The Federal Reserve Board announced that the rate hike will be progressing gradually in the future, and announced that it will raise two more times this year and three times next year.
4. Medical commitment (abolition of Obama care)
The United States did not have a good policy system for the entire nation. There is no medical insurance system and medical expenses are too high to compare with our country. So Obama implements a system similar to Korea's medical insurance service, which can benefit all citizens. Trump was dissatisfied with the need for over-budgeting to maintain the health care system. So, Donald is claiming the abolition of care.
5. Security pledge (Additional sanctions against the North Korean missile threat, USFK withdrawal / defense costs adjustment)
In the Trump era, the US and North Korea may face extreme confrontation. Trump is likely to attack North Korea because North Korea is likely to have nuclear weapons. Also, Korea and Japan, there are USFK and USFK deployed. As such, the United States has been arranging an army of some allied nations to maintain stability and peace throughout the world. Trump, however, says that these overseas military deployments make the countries free of the military power of the United States, but are not paying a reasonable price for it. He argues that the country must pay the defense fee for the country. In other words, Donald Trump suggested that withdrawing from the United States and making it more preferable to deal with domestic affairs rather than maintaining stability and peace throughout the world through US troops deployed overseas.
6, Fossil fuel production expanded
In order to solve global environmental problems such as global warming, countries around the world have concluded various agreements and suppress thermal power generation. Trump, however, argues that global warming is not a serious problem and that the pollution emitted by thermal power generation does not have a serious impact on the real world. In addition to these claims, Trump is expected to increase production of fossil fuels by eliminating all climate agreements between countries. In particular, with the recent explosion of shale oil production in the United States, the weight and voice of the world oil market will be growing. Production of fossil fuels is likely to further expand for domestic growth. If this happens, fossil fuel prices will fall and friction with other countries producing crude oil is inevitable.
7. Infrastructure commitments
Trump argues that the old and worn infrastructure of the United States has an adverse effect on economic activity. Trump's plans to expand its infrastructure investment are expected to stimulate the economic reflation and rebound potential growth rates. However, it is expected that interest rates will inevitably rise due to the increase in the fiscal deficit and the increase in demand for funds due to the economic reflation. For example, if infrastructure facilities such as highways, tunnels, airports, etc. are reconstructed and jobs are created, the unemployment rate will decrease and the inflation rate will increase. Especially when the interest rate rises, the interest rate of the loan increases and the interest burden of the vulnerable people such as the low income and the self-employed who receive the loan or the mortgage becomes big. In this regard, it is necessary to keep in mind the management of loans.
Trump's expanding fiscal, industrial, and trade policies have had a negative impact on the dollar's exchange rate, which is expected to increase exchange rate volatility in the future. Therefore, monitoring of the exchange rate volatility should be strengthened. In response to the US stimulus, expanding US exports, entering into infrastructure companies, and utilizing parts that can generate profits about China and Mexico's pressure, we should seek new growth opportunities.
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