Falling at the first hurdle, Donald Trump has failed to convince the Republican congress of his alternative to Obamacare. The US president has ignited fears that his pro-business agendas will also face opposition.
One of the pinnacle concerns is tax reform. Trump has proposed to cut taxes while increasing expenditure on infrastructure. Traditionally, this would not be the kind of proposition the Republican party would support.
However, Republicans may be more interested in the corporate tax part of the proposal, where Trump has vowed to slash the amount corporations pay to governments. The united states have one of the highest corporate tax charges in the world at 39.1%.
There are many unanswered questions swirling around markets, with the unity of the Republican party at the forefront. Trump, a member of the Republican party, has gone against the status quo, a move not familiar to the conservative wing of American politics. This break from tradition could alienate his party.
Not all members will embrace this new image of revolution. Grappling with the balance between new and old, Trump may face much more resistance from his party.
For this reason, investors are losing faith in Trump’s ability to initiate change. For now, it remains uncertain if the US president will deliver on the fiscal stimulus the market had anticipated.
Equity markets and the dollar have retreated this morning, as investors wrestle with Trump’s shortcomings.