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What you need to know today
The 47th U.S. president
President Donald J. Trump was sworn into the White House on Monday and began signing a flurry of executive orders. He issued “full pardons” to people charged in relation to the attack on the U.S. Capitol on Jan. 6, 2021; halted, for at least 75 days, the enforcement of a law that would ban TikTok in the United States; and created the Elon Musk-led Department of Government Efficiency, or DOGE.
National energy emergency declared
Trump on Monday declared a national energy emergency — part of a sweeping agenda that aims to increase fossil fuel production — and ordered the U.S. to withdraw from the Paris climate agreement. He also repealed the Biden administration’s various climate goals, such as achieving net-zero emissions by 2050.
Trump targets tariffs
Trump told reporters on Monday that he’s thinking of imposing levies of 25% on Mexico and Canada, and is targeting Feb. 1 for them to come into effect. He also issued a trade memorandum instructing federal agencies to scrutinize trade policies with other nations, especially China, Canada and Mexico — but the memo stopped short of introducing new duties.
Biden’s pardons
Former U.S. President Joe Biden on Monday issued preemptive pardons for several family members, citing concerns that they would be targeted by “baseless and politically motivated investigations.” Biden also issued pardons for Anthony Fauci, Gen. Mark Milley, members of Congress who investigated the Jan. 6 Capitol riot and others who he said were under threat of being “baselessly” targeted for political purposes.
Asian markets rise after inauguration
U.S. markets were closed Monday for Martin Luther King Jr. Day. Stock futures mostly edged lower Tuesday after Trump indicated he’s considering tariffs on Mexico and Canada. Asia-Pacific markets advanced Tuesday. Hong Kong’s Hang Seng index added almost 1%, while Korea’s Kospi index ticked down around 0.1% as the country’s wholesale inflation rate for December climbed 1.7% on an annual basis.
[PRO] Second time an echo of the first?
Trump’s second term might have the same effects on certain asset classes as it did the first-time round, according to some on Wall Street. To find out, CNBC Pro looked at the performance of several assets during the first 100 days of Trump’s last presidency and asked analysts how those assets will fare.
The bottom line
Donald Trump has hit the ground running since officially becoming the 47th president of the United States, signing numerous executive orders fresh off his inauguration. Here are the two main issues investors will keep an eye on.
Tariffs
“To me, the most beautiful word in the dictionary is ‘tariff,'” Trump told the Chicago Economic Club in October. Trump said on Monday he’s mulling over imposing 25% tariffs on goods from Canada and Mexico by Feb. 1. On the campaign trail, Trump vowed to levy a universal tariff of up to 20% on all imports to the U.S and more than 60% on Chinese products.
Tariffs are imposed by governments ostensibly to protect domestic industries. Companies that import goods pay what is essentially a tax, driving up costs. This nudges them to look for local suppliers instead.
With supply chains being so integrated globally, and much of the manufacturing being done outside the U.S., companies may find it hard to shift production to local shores. The higher costs, then, will likely be passed on to the consumer in the form of increased prices.
In other words, tariffs could lead to more inflation.
Deportations
At a pre-inauguration event titled “Make America Great Again Victory Rally,” Trump pledged to his supporters that “the invasion of our country will have come to a halt.” Like tariffs, tighter immigration policies — or outright deportations — are typically enacted to protect the domestic economy (among other reasons).
The theory is that, with fewer people competing for each open job, it’ll be easier to gain employment.
But many parts of the U.S. economy, such as construction and agriculture, are staffed by undocumented immigrants, who take on jobs undesirable to residents. Even documented immigrants are crucial to higher-skilled sectors such as tech — as proven by Elon Musk’s tussle with Trump supporters over H-1B visas.
If reliable sources of labor vanish overnight, companies will have to raise wages to attract talent, which might reintroduce the prospect of the dreaded wage-price spiral.
Other policies
Trump has promised many other economic measures, such as corporate tax cuts, legitimizing cryptocurrency and pulling back on green energy subsidies.
Tariffs, however, might have the biggest impact on the economy and financial institutions globally.
— CNBC’s Sam Meredith, Ryan Ermey, Annie Nova, Rebecca Picciotto, Evelyn Cheng and Lim Hui Jie contributed to this report.
