Trump 2.0 will unleash the primal forces that drive Wall Street
There’s a new Donald Trump running for the White House and his RNC speech contained some powerful messages for Australian businesses.
There’s a new Donald Trump running for the White House and the newly crowned Republican nominee wants to unleash the primal forces that drive Wall Street: aspiration.
If the polls are right, Trump is the frontrunner. He’s also more calculating by moving towards the centre ground to shore up Middle America and doubters in his bid for re-election.
And while the familiar themes remain – China, immigration, and trade – there were some powerful messages for Australian business in his near two-hour speech to the Republican National Convention in Milwaukee.
Underpinning it was the idea of aspiration, the spirit that has long been the lifeblood of the US economy. To set that free is to breathe more momentum into shares and the economy. After years of the pandemic and inflation wrecking its damage on households, there is a hunger for this that goes beyond the US and around the world.
While the Democrats appear to be racked by indecision about the future of Joe Biden’s nomination, Trump told his Americans they should be aiming their expectations sky high and demanding more from leaders.
Still, the global landscape Trump faces has changed dramatically from when he left office in January 2021. Inflation has surged and has not been fully tamed. The stockmarket is already at record levels, interest rates are painfully high and the US is battling a cold war with both China and Russia at the same time. There is no room for big new spending initiatives or tariff wars.
Former top CIA official Dennis Wilder, a specialist on Asia and Pacific who has worked as an White House adviser under several presidents including George Bush Jr and Barack Obama, told The Weekend Australian you are likely to see a different motivation for a re-elected Trump.
“What you have to understand about second terms (presidents), they are all about legacy,” Wilder, now a senior fellow at Georgetown University, says in an interview. “They’re thinking what their statue is going to look like, what people 100 years from now are going to say about you.”
New energy
A rebooted Donald Trump presidency now has the potential to reorientate three major themes: energy, economy and leadership.
First he wants to make the US an energy superpower, without the green mandate. The cost of energy will be the focus and that means gas, something that America has plenty of, will play a bigger role. Nuclear, less contentious in the US, will be back on the agenda.
Biden’s curiously named Inflation Reduction Act, the $US600bn spending spree, doesn’t stand a chance for pet renewable projects that are not delivering lower energy costs.
So too any electric vehicle incentives will be scrapped on “day one”. Biden’s tougher emissions standards financially favours the production of EVs over petrol vehicles.
If implemented, this in itself won’t bring the global switch to EVs to a halt (China will continue to be a major consumer), but it will change the trajectory for how car makers – including in Europe – plan new models.
Trump wants to even the playing field between EVs, hybrids and petrol-driven cars and this could slow demand for lithium or car-battery tech.
Trump knows that energy, and lots of it, will be the new key to winning the artificial intelligence arms race. Those efforts and at times billions of dollars of waste into rewiring the grid for EVs is better spent on things like AI and infrastructure such as roads and bridges.
Made in the USA
The US economy is also set to get more focus, but Trump’s repeated attacks on inflation and the need to pay down debt could suggest some surprising restraint. He has drawn a line between lowering interest rates and taming inflation. He wants business to pick up the momentum to reinvest.
Unemployment might be low and the US economy ticking over but on the ground the cost of living is biting. For voters the cost is 20 per cent higher today from when Biden took office.
However, there’s other measures including the promise of lower taxes and return to protectionism, particularly for cheap car imports, that are at odds with fighting inflation. His vice-president pick, JD Vance, is a protectionist hawk and has most to gain to argue for tariffs.
There is a familiar refrain of manufacturing and making it in America. Trump wants to switch the spending away from green industries to technology and defence to be all made in the US.
This plays firmly into Trump’s legacy about building the economy for generations.
The push to shut off a source of cheap immigration – Trump maintains he is not against legal immigration – could keep the US jobs market tighter.
New leadership
The final theme of the Trump nomination is all about leadership. That is for Americans to demand more from their leaders. This is certainly in contrast to Prime Minister Anthony Albanese’s consensus-driven approach.
After an attempt on his life, Trump is surrounding himself with “can-do” people. He was flanked by tough guys. Hulk Hogan and UFC boss Dana White. Trump, who literally dodged a bullet, believes he can stop wars with a single telephone call.
It is time to start expecting and demanding the best leadership in the world, leadership that is bold, dynamic, relentless and fearless.
One CEO of a globally focussed Australian company still fears about China and Taiwan as the global flashpoint.
But China, the CEO believes, is not in a hurry particularly while Taiwan remains such a dominant force in chip manufacturing and aggression here would be enough to agitate the rest of the world.
To be sure a dispute between China and Taiwan will be a major economic shock for Australia, but that’s going to be something to worry about next decade. Trump has shown ambivalence towards Taiwan, even a reluctance to get the US dragged into the dispute. He has suggested they need to pay more for US protection. This all gives China a small opening.
After all, Trump is all about the art of the deal and he has never wavered from that.
“The best trade deal was the deal I made with China, where they buy $US50bn worth of our product,” he says.
BHP’s US man
Watching a potential Trump presidency unfold will be former NSW premier Dominic Perrottet, who will have a front-row seat in Washington in the newly minted role of new US corporate affairs boss for BHP. The appointment is significant for BHP, which doesn’t currently have anything of scale in the US, but the Australian miner is laying the groundwork for more.
As part of the Perrottet appointment, BHP has also poached AJ Nichols, the long-serving global director of corporate affairs for Brazilian iron ore major Vale to head up corporate affairs across North America. Nichols is a Washington veteran, previously working as chief of staff to several Canadian ambassadors there.
In recent years BHP chief Mike Henry has quietly committed to several stints in Washington, including long-term visits.
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