Trump's appointments
The Trump campaign has been making various new appointments to senior roles in the administration. Here are the commercial implications.
Commercial Summary: This piece, for subscribers, helps buy-side professionals understand what Trump’s policies mean for Meta, Alphabet, LinkedIn, Wall Street, defence contractors, Democrat politicians, and American businesses. The piece also examines the bind that the UAE and Saudi Arabia find themselves in, as Trump appoints a group of pro-Israel hawks who are likely to pressure the Gulf into escalating against Iran, a policy which the UAE and Saudi have been seeking to avoid. It also addresses the risk of a direct war between the US and Iran.
Border Czar: Tom Homan
When asked if there was a way to do deportations without separating families, former Acting ICE Director Tom Homan proposed deporting families together.
Implications: We expect all benefits to immigrants to be cut early on. We also expect frequent raid against employers like abattoirs, farms, Amazon, Deliveroo, Uber, etc… to enforce immigration laws. We anticipate large fines being imposed against these employers if they are found to hire illegal migrants.
The ensuing labour shortages will boost wages and reduce rents, as well as general demand for low-end cheap goods, while helping businesses that cater to a middle class clientele.
American firms will face higher wage bills as a result of the crackdown on illegal migration. This will encourage more automation, however, as other Trump policies encourage the repatriation of capital and profits to the US. Clients may wish to seek our help in identifying industries by labour sector productivity and intensity of automation, to help them identify winning and losing sectors.
Homan has also spoken of using US Special Forces against the Mexican drug cartels. The relationship with Mexico is set to be very challenging, with the Trump administration using tariffs and the threat thereof, as well exposing Mexican corruption and Mexican government collusion with the cartels, in order to get what it wants commercially and about migration. This may lead to the cartels conducting attacks in the US.
Attorney General: Matt Gaetz
Gaetz was falsely accused of human trafficking of a minor by the DOJ, although no charges were brought. He was a vocal defender of the January 6 protesters and rioters. He is a fierce defender of Trump against various questionable DOJ and other investigations.
Implications: Gaetz is almost certain to bring anti-trust investigations against Alphabet (Google), and investigations into election interference against Alphabet and Meta (Facebook), and to former executives at Twitter, for their role in suppressing stories favourable to Trump and unfavourable to his opponents. Companies like LinkedIn also face risks, as do Wall Street barons who have drawn too close to China or who may be involved in insider trading. Even the NBA, which has been extremely woke at home but very deferential to China, is at risk.
Furthermore, companies and universities that have engaged in what is euphemistically referred to as “positive discrimination”, which is discrimination against whites and sometimes Asians, are very likely to face investigations, fines, and all manner of legal risks. Companies with robust DEI policies that seek to promote minorities are at severe risk.
Last, Gaetz is likely to investigate Jeffery Epstein’s client list and P Diddy’s depraved parties with minors. Many celebrities, congressmen and titans of industry, academia and finance are likely to find themselves in humiliating situations and under investigation. Even Nancy Pelosi’s suspected insider trading may be investigated.
Gaetz is there to do to Trump’s enemies what they did to him, but at a much larger scale.
Department for Government Efficiency: Elon Musk and Vivek Ramaswamy
This duo hope to cut USD2 trillion in government spending, including by sacking thousands if not hundreds of thousands of federal government employees (there are around 3 million of them). In turn, this would enable Trump’s planned tax cuts, bringing corporation tax to 15% and encouraging the repatriation of capital. Musk, like Trump, is especially agitated by the excess regulation, bureaucracy and red tape, and in Ramaswamy, he has an executive assistant who can help him de-regulate at scale, merge various agencies and change how government functions.
Implications: Spending and tax cuts of this scale are unprecedented. This may cause a major fight with Congress as reducing federal agencies and staff will cut off a source of patronage.
This makes it unlikely that the cuts in spending will happen quickly or in full. That said, do not bet against the richest man in the world, who can make cranes catch re-usable rockets, and who is the new BFF of the President of the United States. Massive spending cuts will happen, and so will tax cuts. With a balanced budget, lower taxes and high tariffs, this will generate an investment boom in the United States, with small and especially mid-sized companies positively impacted by regulatory cuts.
Secretary of State: Marco Rubio (and National Security Advisor Mike Waltz)
Rubio and Waltz are there to enforce a very tough policy on China. Rubio, while a Senator, worked on understanding Chinese influence, American-Chinese interdependences, and the technological risks from China. Rubio is even sanctioned by the Chinese government.
Implications: China will have to decide if it wants to waive the sanctions on Rubio, remove them completely, or enforce them, triggering a breakdown in relations. Trump knows that he is imposing this test, with the aim of forcing China to back down on its sanctions on Rubio before any further negotiations start.