Trump’s First 100 Days Economic Impact: Power Moves and Market Shocks

On Wednesday of this week (April,30), President Donald Trump, the 47th President of the United States, will complete the first 100 days of his second term. This period has been filled with events that have upended the global economy and prompted many to reconsider trade relations with the United States, both with competitors and trading partners.

The following are the most notable events during this period, what analysts are saying about it, and what Trump's upcoming policies could lead to.

First. Why ‘The first 100 days of a presidential term’?

This early period in any American president's term gained symbolic significance during the first term of President Franklin Roosevelt, who assumed the reins of the American presidency during a very critical economic time, specifically the Great Recession. It has subsequently become a measure of the early success of any American president.

Second. Trump has shaken up the economy in the first 100 days!

Donald Trump's imprint on the world of business and economics has become undeniably clear, to the point that it has been described in the pages of Time as the most destabilizing period in American history.

Trump has issued numerous decisions related to domestic American affairs and foreign trade relations, which have been described as the most aggressive financial decisions or policies, while others have described them as unjustified measures.

But Trump ignored all the criticism directed at his performance and policies, describing what was happening as the cost that must be paid to reshape the global economy and restore America's greatness.

However, the grand goal Trump set was accompanied by many factors, most notably widespread fears that he would ignite a global trade war that would lead to a widespread recession or even push toward the stagflation that occurred in the late 1970s, when the problems of recession and high inflation combined.

If there was anything that preoccupied the world during the first 100 days of Trump's second term, it was the extensive tariffs he imposed on various countries around the world, which led to a significant collapse in financial markets.

With these tariffs, Trump added a dilemma that raised global doubts about the independence of the US Federal Reserve when he attacked US Federal Reserve Chairman Jerome Powell and threatened to fire him.

All these fears of a global recession, a decline in trade, and the threat to hopes for a return to economic stability, which occurred during this early period of Trump's term, were described by Trump himself in recent statements to Time magazine as a "remarkable success," when he said, "What I'm doing is exactly what I campaigned for."

Trump also emphasized that his efforts aim to address and correct the policies of his predecessors from both parties.

Third: Reactions to Trump's Policies of his second term:

The global reactions to Trump's policies can be described as historic, as Germany and Europe increased defense spending in a surprising and unusual move for these economies.

China, a direct competitor to the US economy, dealt with the US on a clear parity basis, responding to the US tariffs with similar tariffs and demanding unconditional fair treatment before sitting down to the trade negotiating table.

While this was the case for Europe and its German economic leader, along with China, international reactions varied, with some seeking to negotiate trade with the US, while others attempted to enact emergency measures to protect their economies from the impact of these tariffs.

Companies, regardless of their size, sent direct messages that Trump's policies could cause them significant losses, calling on Trump and his administration to roll back the tariffs, which many believe will not be in anyone's interest.

At the same time, there were indicators warning of impending economic troubles, most notably the consumer confidence index, which hit its lowest level in three years, with inflation expected to rise because of the trade war.

Trump's approval rating, according to a Pew Center poll, is at its lowest level so far this early in his presidency compared to any other president.

Fourth. Winners and Losers in the First 100 Days Economic Policies:

Trump came into office with many hopes that his second term would be fruitful and promising for the financial markets. However, the picture quickly turned upside down, as Trump threatened to impose tariffs before backing down. The picture became even darker after Independence Day on April 2 and Trump's attacks on the Federal Reserve.

Stock indices collectively declined from Trump's inauguration on January 20 until April 8, the day before he announced the suspension of his tariffs for the next 90 days, as illustrated by the following figure:

Indeed, the bond market (US Treasury bonds) was the most negatively affected by Trump's policies, experiencing a price decline and a rise in yields, indicating investor fears of economic problems in the US.
Demand for the US dollar declined as confidence in its economy declined, leading the US dollar index to fall to its lowest level in three years against a basket of major currencies.
On the other hand, some winners emerged, specifically safe havens to which investors fled the turbulent US situation. These havens included gold, the Swiss franc, and the Japanese yen, in addition to the euro, which benefited from the decline in investor demand for the US dollar.

Fifth: How will Trump end his first 100 days?

Some analysts point out that Trump's actions early in his presidency were merely confirmation of his determination to subjugate everyone and push them to a different playing field when dealing with the US. This is evident with many parties, such as Japan, South Korea, Taiwan, and several Asian countries that have begun to sit at the negotiating table, in addition to somewhat reassuring statements from the European side.
This view is based on Trump's postponement of tariffs just a few days after Independence Day, during which he announced comprehensive and broad tariffs on various countries around the world, until July 9th. This postponement was prompted by Treasury Secretary Scott Besant and Commerce Secretary Howard Lutnick. Trump thus granted all parties a period to negotiate with the US individually. Financial markets rebounded immediately after Trump's announcement of this suspension, although they did not reach pre-"Liberation Day" (April 2). However, some safe havens began to decline, led by gold, which retreated from its all-time high of nearly $3,500.
As for China, Trump repeatedly emphasized that negotiations or talks were taking place between them. He even predicted a full set of deals would be announced in the coming weeks, despite China's denials.
Trump also backed down from his attacks on the Federal Reserve Chairman, asserting that he never intended to threaten his dismissal or interfere in the Fed's policies in a negative way. Rather, he was urging Fed officials to cut interest rates to prevent any type of recession.

Conclusion: 

As previously discussed, the first 100 days of Trump's second term were marked by extremely bold economic measures, through which Trump openly intended to reshape the dynamics of the global economy and trade, significantly disrupting financial markets.
Despite many warnings against these measures and policies, some analysts believe that Trump may shift the tone of his fiscal policies once he is reassured that many parties have returned to the trade negotiating table and a solution is reached that addresses several economic issues, most notably the US trade deficit and reshapes the image of mutual tariffs between various global economies and the US economy, in a way that promotes the strengthening of domestic US industry in the face of global competitiveness.