The election of Donald Trump as 45th US President will result in a transformational change in US politics, as it will mean that not alone will a Republican occupy the White House, but that unlike the Obama administration, the Republicans will control both Houses of Congress, ending the gridlock which has characterised the US administration, over the past 8 years. It will also ensure a conservative majority in the US Supreme Court, as members are replaced in the coming years.
Markets
The immediate impact of the possibility of a Trump win was on markets - with Dow futures plunging on the first indications of the possibility. This supplemented by a call from the New York Times that a Trump victory was probable by 90%, and other indicators, was taken by markets as negative, but also a result that would, in the call of Fox News financial correspondent, Maria Bartiromo, likely be 'a big buying opportunity' when US markets open. This is because the initial impact of the markets to react negatively due to the uncertainty that markets dislike, due to the surprise nature of the result, and President-elect Trump's perceived anti free trade sentiment.
Currency
As financial markets priced-in a Trump victory, the US dollar slumped by 2 cents against the euro in the 3 hours between 8 pm and 11 pm EST - Ireland's main external exchange rate. This reflects the FX market's view that Trump is seen as a protectionist, committed to taking action in the trade area to 'make America great (i.e. competitive) again', which would indicate a propensity for US policy to favour a weaker dollar.
Foreign Direct Investment
For Ireland, Trump, and importantly, US Congress policy regarding taxation is important.
A Trump administration would favour cutting US corporation tax to 15%, and this, with the support of Congress, would become an increased possibility for Irish external tax policy to take into account.
Ireland's major stimulus to corporation tax revenues and FDI has been the extremely high US corporation tax policy, a path a Democrat administration would have been likely to have kept in place.
The prospect of a Republican era raises the competitive stakes for Ireland in the FDI arena going forward, and this would be one of the biggest economic implications of a Trump victory.
