As Republicans gather in Cleveland in the week ahead, they will be counting delegates. Investors will be counting profits and listening for policies that could affect them.
The businessman-turned-likely GOP presidential nominee, Donald Trump, is set to become the Republican Party’s standard-bearer as the S&P 500 stock index hovers near all time highs. But putting Trump-branded policies in the economy could make investors very nervous.
Trump’s strong-armed tactics on trade, for instance, have been roundly criticized by economists as protectionist and potentially disastrous for America’s consumers and exporters. Trump has talked about slapping a 45 percent tax on Chinese-made products sold in the United States. Retailers, already under intense price pressure from online outlets, would transmit this tariff through to consumers. American exporters, such as auto manufacturers and food producers, would likely face retaliatory charges on the products they hope to sell in China.
Trump, like many, has acknowledged the tax code is broken. He has called for cutting personal and corporate tax rates. He has also advocated for more spending on the military and does not think spiraling Medicare spending needs to change. While such policies may be profitable for defense contractors and health care providers, Moody’s Analytics predicts, “The economy will be significantly weaker if Mr. Trump’s economic proposals are adopted.”
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The Republican Party has long been considered the party of business. It was Republican President Calvin Coolidge who chimed in 1925, “The chief business of the American people is business.”
Investors will hear a lot about 21st Century Republicanism and business during the week ahead. Regardless of their political persuasion, long-term investors should heed the adage — “follow the money” — and look for profit potential.
Financial journalist Tom Hudson hosts “The Sunshine Economy” on WLRN-FM in Miami. Follow him on Twitter @hudsonsview.