Many Americans are speculating about what Donald Trump’s presidential win will mean for global economies during his term in office and over the long term. If President-elect Trump’s policy statements that he promised on the campaign trail come to fruition, it will signify a coming shift in global policies surrounding free trade, immigration and international finance.

While the win dealt an initial shocking blow to global financial markets, with stock futures plunging the night of the election, the futures market improved the morning after Trump’s acceptance speech. There was surprise but the surprise was short-lived, and the hope is that trend continues.

President-elect Donald J Trump – who will become the 45^th president of the United States of America – has stated that his immediate priorities include a rewrite of the tax code, which will have a major impact on the commercial real estate industry. Reactions from Trump’s proposed legislation has commercial real estate professionals split over the positive and negative consequences.

Pros

• If Trump can deliver what he promises and create 25 million jobs and reduce the corporate tax rate, which is 38.9% (the highest in the world among industrial nations), it could bode well for all industries. The change to the corporate business tax will impact startup companies by creating additional opportunities, and hopefully larger companies reinvesting additional capital into business.

• Trump’s stance on Dodd-Frank regulations stated on his transition website that “banks and lenders provide funding to small businesses and mortgage borrowers to help fund the American Dream,” and that Dodd-Frank regulations are an example of what not to do, in that federal policy should encourage free enterprise, not stifle it.

• Trump will roll back government regulations built up under President Obama that impose stricter guidelines on how businesses access credit.

Cons

• Beacon Economics’ forecast analyzed how Trump’s policies could be enough to push the country into a recession. While tax cuts could create a good short-term impact and growth, it will increase the federal deficit and widen the trade deficit, the report forecasts.

• Strict immigration policies and deportation of undocumented residents could hinder companies from attracting additional talent from abroad.

• Trump’s trade policy and how the President-elect campaigned on using tariffs to increase the cost of goods from China and other countries imported into the U.S. would impact the supply chain and may cause other countries to retaliate and put tariffs on American goods.

Summary

While political uncertainty is not anybody’s friend, real estate or not, the expectation is that advisers to the White House will rein in rhetoric from the race and propose more reasonable positions. The pace and intensity of commercial real estate may slow as owners and investors wait to see what the new administration and still-Republican-controlled Congress proposes. However, the likelihood is that Trump’s policies will only become clear after his first 100 days in office.

 

Sources:

BISNOW, Blackstone’s Schwarzman Predicts Trump Will Be Good for Business

BISNOW, Trump to be Named 45^th President of the US, Now What?

NAIOP Source, Trump Wins and Republicans Hold the House and Senate – What’s Next?

BISNOW, 4 Things to Consider Regarding Trump’s Plans for Dodd-Frank

BISNOW, President-Elect Trump’s Potential Impact on the West Coast