US Elections: Trump attempts to restore some credibility - MUFG

Derek Halpenny, European Head of GMR at MUFG at MUFG, suggests that Donald Trump’s economic plans have come in for serious criticism in the past with the Tax Foundation estimating that his previous proposals would have cost USD 10trn over the first decade.

Key Quotes

“Yesterday, Trump appears to have tried to tone down some of the extreme measures in order to reduce the overall burden and make his tax policies more credible. Importantly, some of Trump’s announcements yesterday in a speech in Detroit were part of a Republican package of proposals contained in its “Better Way Agenda” program of measures to boost the economy. That will please Republicans and may go some way to rebuilding bridges with senior Republicans who were rumoured to be losing hope.

There was not enough detail to get a clear estimate but the general view was that while his new proposals would still imply considerable costs, it would be lower than the USD 10trn estimates from before. Given Clinton’s proposals imply only a very modest increase in costs relative to current law, Trump will still be able to differentiate himself very clearly on the economy and tax.

The dollar remains at risk from an escalation in concerns over a Trump victory. While recent opinion polls have seen these concerns ease, a shift to more toned down policies may help broaden his appeal and result in a lift in opinion polls once again.”