Will Trump keep all his promises?

On January 20, the new (or old) President of the U.S.,
Donald Trump, will be inaugurated, and the big question on the minds of private
investors and governments alike is: what now?

Throughout his campaign, Trump made numerous promises,
including tackling the US national debt, ending the Ukraine conflict in one
day, and, of course, imposing tariffs
against the rest of the world.

In addition, he promised to cut taxes, including those for
corporations. This fueled optimism in the markets, which boosted the S&P 500,
Nasdaq, and Dow Jones following the announcement of the results.

But will Trump deliver all his promises?

Throughout his political career, Trump
has made many promises but has not always kept them. A clear example is the
construction of the wall with Mexico, the main issue of his previous campaign.

First, out of the 1,000 promised miles, which were later
reduced to 500 miles, only 47 miles of new barriers were built. The rest were
renovations of existing structures.

Second, and perhaps more importantly, U.S. taxpayers ended
up paying $15 billion for this, not the president of Mexico, as initially
promised. Nor did it solve the illegal immigration problem.

Trump also promised to eliminate the national debt, which
ballooned by $8.4 trillion. The same trend is expected to continue, and the
debt is unlikely to fall below $36 trillion soon.

According to the nonpartisan Committee for a Responsible
Federal Budget, its tax cut proposals alone will add $7.5 trillion to the
national debt over the next decade. The BTC reserve likely won’t help solve
this issue.

The main issue is that the government
already spends massive amounts to service the debt. From $476 billion in
2022, the cost has risen rapidly to $882 billion in 2024 and is expected to
continue growing.

As Bankinter analysts highlight, a 3% deficit combined with
3% in interest payments exceeds the typical GDP growth rate of 4.5%. This leads
to a continued 1.5% increase in the debt-to-GDP ratio.

Not surprisingly, despite four rate cuts totaling 1%, yields
on 10-year U.S. Treasury bonds remain higher than where they started the year
(well before the Fed changed monetary policy).

Another potential setback could come from resolving the
geopolitical crises, especially between Russia and Ukraine, where neither side
seems willing to budge on their positions.

Bottom line?

Trump may be able to deliver on his promises when he has all
the necessary levers of power, or he may not. In this regard, making big bets
on guaranteed outcomes seems risky.

This article was written by FL Contributors at www.forexlive.com.