Many billionaires and business people support Donald Trump. That is no surprise. He would be good for profits, they believe. He offers lower taxes and less regulation. Some have argued that certain policies of his — the tax cuts and toughness on China and freeriding allies, for example — were not foolish. Moreover, unlike most Democrats, Trump and the Republican party like business and business people. Why should they not embrace him in return?
Even looked at rather narrowly, this does not make much sense. In office Democrats have frequently been rather good for business. The financial crisis of 2007-09 occurred under the watch of a Republican administration. The stock market has boomed (and bust) under both Democrats and Republicans. So has the share of profits in US GDP. Trust in government collapsed in the 1960s and has, since then, gone up and down under both parties.
Moreover, Trump’s economic policy preferences are surely dangerous in current circumstances. He cannot understand the value of an independent central bank and despises tight monetary policies. He promises to cut taxes, although deficits and debt are on a perilous path. He plans to launch a trade war against the world, not just China. He has even suggested that tariffs could replace income tax. Might this work? As a blog for the Peterson Institute for International Economics states: “Simply put, no. Tariffs are levied on imported goods, which totalled $3.1tn in 2023. The income tax is levied on incomes, which exceed $20tn; the US government raises about $2tn in individual and corporate income taxes at present. It is literally impossible for tariffs to fully replace income taxes.”