Trump, Trade & Crypto: What's Next for Global Markets?

Having entered the public spotlight as a businessman before his presidency, Trump’s economic policies during his first term were characterised by an "America First" agenda. His positions on international trade and digital currencies had far-reaching effects on global financial markets, and many are wondering what his potential policies could mean for investment strategies in the years ahead.

But the big question is, are we in it for good or the opposite? Let’s find out!

Trump’s Take on International Trade: Revisiting Protectionism and Tariffs

One of the central pillars of Donald Trump’s economic policy was his focus on reducing the U.S. trade deficit and recalibrating international trade agreements in favour of American interests. Under his leadership, we saw a marked shift toward protectionism, particularly through the imposition of tariffs on countries like China, as part of his strategy to force a "fairer" trading environment for U.S. businesses. Trump’s "America First" trade policy aimed to prioritise American manufacturers and workers, seeking to bring jobs back to the U.S. and reduce the dependency on foreign goods.

During his first term, the U.S. engaged in a trade war with China, resulting in tariffs on billions of dollars' worth of goods. While these tariffs were designed to curb the trade imbalance and pressure China on intellectual property rights, the consequences for global supply chains were significant. In 2020, The Wall Street Journal noted that the trade war led to price increases in consumer goods, strained global relations, and forced businesses to reconsider their supply chains and manufacturing strategies.

As Trump wins the second term, we could expect a continuation of his protectionist policies. This would likely mean the imposition of new tariffs on foreign goods, especially those from China and potentially from European Union countries. For investors, this raises critical questions about how global trade dynamics will evolve, particularly regarding industries dependent on cross-border trade, such as tech, manufacturing, and agriculture.

Impact on Global Supply Chains and Investment Strategies

For investors in global markets, especially those involved in industries affected by international trade policies, these protectionist policies could lead to significant shifts in supply chains. Companies that depend on international sourcing and manufacturing might see increased costs as tariffs drive up the price of imported goods. This could lead to changes in consumer prices and potentially affect corporate profit margins, leading some investors to adjust their strategies.

On the flip side, Trump’s protectionist stance might create new opportunities for U.S.-based manufacturers or companies that can capitalise on the trend of reshoring jobs back to American soil. U.S. companies engaged in infrastructure development, manufacturing, and technology might benefit from government incentives aimed at boosting domestic production.

Investors with an eye on emerging markets should also watch carefully. Countries that are less reliant on trade with the U.S. or those diversifying their export markets might prove more resilient in the face of potential trade wars. Geopolitical events, such as shifting trade alliances and regional pacts, could be lucrative areas for strategic investment.

Trump's Stance on Cryptocurrencies: Regulation or Innovation?

In contrast to his protectionist policies on trade, Donald Trump has expressed more ambivalence toward cryptocurrencies. While he has not fully embraced digital currencies, he has repeatedly criticised Bitcoin and other cryptocurrencies as a potential threat to the U.S. dollar’s global dominance. During his presidency, he took a cautious approach to regulating crypto markets, often voicing scepticism about their volatility and potential for illegal activities.

However, Trump’s stance on cryptocurrencies could evolve as he returns to the presidency. As cryptocurrencies gain mainstream adoption, with Bitcoin now seen as a "digital gold" and Ethereum powering decentralised finance (DeFi), there are increasing calls for regulation to ensure the market's integrity. The Financial Times has reported that governments worldwide are looking into creating digital versions of their currencies, with central banks preparing for a future where cryptocurrencies play an integral role in the financial ecosystem. Sounds like a huge paradigm for us all? Perhaps yes, perhaps not to those who have yet to dive into it!

Should Trump pursue a more hands-off approach to digital currencies, it could result in a more favourable environment for crypto adoption, especially in the U.S. Cryptocurrencies like Bitcoin, Ethereum, and others could continue to attract institutional investment, as investors look for alternative stores of value amid traditional market fluctuations.

However, the opposite could also be true: if Trump were to tighten regulations on crypto markets to maintain the dollar's supremacy, this could potentially stifle innovation and limit the growth of the broader blockchain ecosystem. This regulatory uncertainty has been a key concern for many crypto investors, and any major regulatory move by a Trump administration could shake up the markets.

Investment Shifts: What to Expect in a Trump Presidency

If Trump returns to power, investors may need to rethink their strategies in several key areas:

1. Trade-dependent Sectors: As mentioned, U.S. protectionist policies may have major implications for sectors like tech, manufacturing, and agriculture, as tariffs and trade wars could escalate. Companies with substantial international exposure could face rising costs and potential disruptions. Investors in these sectors will need to be nimble and diversify their portfolios to manage the risks of rising geopolitical tensions.

2. Reshoring and Domestic Innovation: On the flip side, reshoring initiatives could open new opportunities for domestic manufacturing, infrastructure projects, and supply chains. Investment in U.S.-based companies and sectors geared toward boosting domestic production could outperform as the government pushes for more jobs to stay on American soil.

3. Cryptocurrency Regulations: Investors in cryptocurrencies will need to monitor how any Trump-led policies unfold, particularly regarding regulation. While a more regulatory-friendly stance could open the door for broader institutional adoption of digital currencies, a more stringent regulatory environment might create hurdles. Keeping an eye on any new regulatory initiatives or bills that could affect crypto markets will be key.

4. Global Diversification: With Trump’s emphasis on reshaping global trade deals, investors may want to diversify their holdings to include regions and markets that are less dependent on U.S. trade policies. Emerging markets, particularly those in Asia and Africa, may be less impacted by U.S.-centric trade tensions and could offer alternative growth opportunities.

5. Digital Assets and Blockchain Innovation: Beyond Bitcoin and Ethereum, blockchain technology is rapidly gaining traction across industries ranging from healthcare to real estate and finance. If Trump can take a more balanced approach toward crypto and blockchain, we could see an explosion of investment in decentralised projects and crypto-powered applications.

Conclusion: Will Our Future Change Under Trump’s Leadership?

The potential for change under a second Trump presidency would have profound implications for both global trade and the cryptocurrency landscape. Protectionist trade policies could disrupt supply chains, alter the course of global markets, and prompt companies to reconsider their manufacturing strategies. At the same time, Trump’s uncertain stance on cryptocurrencies could either foster innovation or curtail the growth of digital assets—depending on whether the U.S. government adopts a more hands-off or restrictive approach to regulation.

For investors, staying informed and adaptable is key. The future may hold significant opportunities, but also risks, as international trade dynamics and cryptocurrency regulations evolve. It’s a time for innovation and strategic thinking, particularly for those invested in emerging technologies and global markets.

As we move into the next election cycle, one thing is certain: change is inevitable. The question is, how will you position your investments to capitalise on — or mitigate — the changes that lie ahead?