Donald Trump will return to the White House for a second term that could usher in sweeping tax, trade and foreign policy changes that would ripple across the global economy if enacted. The presidential race was officially called a little after 5:30 this morning... Trump nabbed Pennsylvania overnight after outperforming his 2020 margins across the map. It’s a stunning reversal of political fortunes that few on Wall Street — or anywhere — would have predicted in early 2021. Younger leaders like Florida Gov. Ron DeSantis and former U.N. Ambassador Nikki Haley successfully courted financial industry donors and appeared prepared to take over the mantle from Trump. Obviously, that didn’t happen. Meanwhile, inflation exploded under President Joe Biden’s watch, creating massive headwinds for Democrats as they sought to pitch voters on a strong labor market and growing economy. While Vice President Kamala Harris narrowed Trump’s polling advantage with voters on economic issues, key polls had her trailing the former president on that front up through the final days of the race. The president-elect has said he’d like to lower corporate rates to 20 percent — and reduce taxes to 15 percent for domestic manufacturers — while raising revenue with universal tariffs and punishing levies on imports from countries like China and Mexico. He has also called for mass deportations that could meaningfully reduce the size of the labor force. That agenda could be inflationary and, depending on the extent to which other countries implement retaliatory trade policies, might also stall the U.S. economy’s momentum. But Trump and his allies say the combination of lower taxes and stronger energy production will cause growth to surge. The U.S. is already producing more oil than any country in history — Trump says that more can be done to lower energy prices — and Wall Street firms and business owners have salivated over the possibility that expiring provisions from the Tax Cuts and Jobs Act of 2017 could be extended next year. Critically, with the GOP now in control of the Senate, he now has ample room to make appointments and pass legislation to follow through on that agenda. Among the many open questions will be the extent to which Trump will follow through on the more populist-leaning promises he made on the campaign trail, including pledges to eliminate taxes on tipped income and overtime, as well as creating new deductions for auto loan payments. For big banks and trading firms, a key concern will be how those policies weigh on federal budget deficits that ballooned during the pandemic and its aftermath. The U.S. has more than $35 trillion of debt and the Committee for a Responsible Federal Budget estimates that Trump’s proposals could add another $7.75 trillion over the next decade. IT’S WEDNESDAY — As always, send your tips and news to Sam at ssutton@politico.com.
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