Why the stock market is up on Trump’s win: Regulation, tax cuts

All three major indexes (^DJI,^GSPC, ^IXIC) jump in premarket trade after former President Donald Trump secured a second term and won the presidential election against Vice President Kamala Harris. American Action Forum President and the former director of the Congressional Budget Office from 2003 to 2005, Doug Holtz-Eakin, joins Julie Hyman and Sean Smith to discuss the expected economic impact of Trump’s victory and why it sends US stocks higher.

“Certainly the most striking difference between the Biden administration and what probably would have been the Harris administration and Mr. Trump is in the regulatory area. The Biden administration has imposed $1.7 trillion in costs on the private sector in not yet four year. That’s twice what Obama did in eight years. During his four years as president, Donald Trump imposed $40 billion in regulatory costs next,” Holtz-Eakin told Yahoo Finance.

He adds that there is “the unequivocal good news of extending the tax cuts, maybe also getting a lower corporate rate,” although “the question of what happens on the tariff front” continues as with Trump’s plans representing “a headwind to growth.” Holtz-Eakin says assessing the impact of Trump’s tariff plans will depend on which party controls the House.

Another significant impact of Trump’s re-election is on immigration. “There will be attempts to change the legal immigration system to minimize immigration to the United States. Deportations are a wild card. He promised to deport 11 million people during 2016. That never happened. We did some work back then that said that it would cost $400 (billion) or $500 billion and take about 20 years. None of that played at all, so I’ve got my eye on that, too.” The immigration plans Trump campaigned on could affect the labor market and, in turn, inflationary pressures.

For more market reaction to the 2024 election, click here.

This post was written by Naomi Buchanan.