The announcement of Donald Trump’s win of the presidential election had an immediate, positive impact on the American financial market.
On Wednesday, the Dow Jones Industrial Average climbed 1,503 points, or 3.6%; the broader S&P 500 gained 146 points, or 2.5%, and the Nasdaq Composite rose nearly 3%. This is a nod of confidence from the financial sector that a Trump White House will mean market-friendly policies, a decline of inflation and a surge of economic growth.
Trump campaigned on lowering corporate tax rates, government deregulation – especially in the energy sector- and increased tariffs on foreign goods coming into the country. China, Mexico, Canada and the European Union are targeted for higher tariffs under Trump.
The price of bitcoin jumped nearly 8% to a record $75,345 before falling slightly. Trump pledged support for cryptocurrencies during the campaign. Shares of the crypto exchange Coinbase rose 18% and almost all cryptocurrencies surged higher, including dogecoin, which jumped 17%.
During his new term, Trump said he wants to extend portions of the Tax Cuts and Jobs Act of 2017 set to expire at the end of 2025. That law decreased the corporate tax from 35% to 21%, along with a combination of personal income tax reductions and threshold levels. Trump has talked about reducing the corporate tax rate from 21% to 15% for companies that manufacture their products in the U.S.
Trump also announced plans to get rid of the $10,000 limit on state and local tax, or SALT, deductions that he signed into law as part of his 2017 tax cuts. Reversing this cap would largely affect higher-income people in high-tax blue states who itemize their deductions.
In September, Trump said he would push for legislation to end taxes on overtime pay to incentivize American workers to generate more wealth and help companies attract employees.
He has also suggested the idea of waiving federal taxes on tipped income and Social Security benefits, though has not outlined how he would make up the lost income to the federal government that such exemptions would generate.
He has also proposed a government efficiency commission as a way to reduce government spending and announced that Tesla CEO Elon Musk has agreed to lead it. The commission’s mission would be to audit the entire federal government to identify and eliminate fraud and improper payments within six months of Trump taking office.
Musk was a Democrat until recently, but endorsed Trump two days after his assassination attempt and at Trump’s request offered thousands of homeowners affected by Hurricanes Helen and Milton with free internet access through his Starlink company. Starlink is a satellite internet provider enabling high-speed, low-latency broadband internet in remote and rural locations across the world.
To help “working Americans” catch up on credit card debt, Trump has promised to temporarily cap interest rates at 10%. The average credit card rate is just under 21%, while the average rate on retail store cards is a record high 30.45%.
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