President-elect Donald Trump and his close advisers, at the threshold of another presidency, are deeply engaged in America’s policy battles. Yet, I can’t identify one principles-based “north star” to shed much light on the agenda. Maybe that will soon emerge, or maybe there will never be one. For now, the policy pronouncements say there’s a new sheriff in town who shoots from the hip. That means it’s up to us to navigate the uncertainty.
That’s not to say Trump lacks plans. He and his advisers are exploring ways to streamline and reshape the contours of government action. Consistently strategically disruptive, he simultaneously seeks to deliver on many MAGA campaign promises. It’s just that these promises run the gamut.
There’s the familiar, from deporting undocumented immigrants to protecting borders to revising tax policy to imposing tariffs on countries and regions that do not respond to Trump’s trade demands.
There’s also talk on one level or another of buying Greenland, recovering control of the Panama Canal, making Canada a state, ending daylight saving time, compelling the European Union through tariffs to increase purchases of U.S. oil and natural gas (even though the EU doesn’t buy energy and America is basically sold out), supporting the union in a South Carolina International Longshoreman’s organizing effort, expedited environmental approval and permits for new $1 billion investments, and cuts in Federal Reserve staff. Confusingly, there’s even a celebration of a $100 billion investment in the United States by the Japanese firm Softbank and simultaneous opposition to Nippon Steel’s efforts to acquire — meaning, invest in — US Steel.
Not all (or perhaps even most) of these policy pronouncements will come to pass, but each goal pursued in earnest will be fraught with uncertainty. Uncertainty is sometimes necessary, and, especially in Trump’s case, perhaps usefully disruptive. As is said, one cannot make mayonnaise without breaking some eggs.
We must acknowledge that rising uncertainty also causes some investors to take a wait-and-see attitude for significant pending investments that might be healthy or necessary. Other investors, consumers or policymakers who oppose Trump’s policies or are worried about their effects may accelerate their efforts. They may try to get things done before the new administration takes office or before it makes a particular change.
For example, some people buy imported cars and appliances in anticipation of higher tariffs. Biden administration regulators rush to get more regulatory actions underway while still in office. There’s even been a rush among some same-sex couples to get married.
Is some of this based on speculation? Sure, but that’s part of the point. Emerging data illustrates how Trump has already generated a rising tide of regime uncertainty. A quick glance at the daily Economic Policy Uncertainty Index, based on a count of key terms used in 10 daily newspapers, is just one way to track this. The Chicago Board of Trade’s rising VIX index, which measures financial instrument volatility, is another. Both show strong upticks in measurable uncertainty.
Investors and political operators are having a hard time predicting the federal government’s behavior using past conventional wisdom. That means they will be doing things differently, adding other layers of uncertainty to the economy.
Such is the case when policy signals do not form a pattern we recognize. We can’t universally call Trump conservative, pro-capitalism, populist, socialist or free-market. But it’s early in the game. Having been warned, we citizens can prepare to see America’s political institutions shaken and reshaped unexpectedly.
Good and bad things will emerge. Savvy moves and mistakes will be made. We’d best keep our seatbelts fastened and our trays in a locked, upright position. The evolving Trump action agenda promises to bring a bumpy ride.
