NEWS

Trump's economic plans leave the future unclear for Southern Arizona

n111616electioneconomicimpactselenaquintanillargb
Selena Quintanilla | The Daily Wildcat

The value of the peso fell from 5.4 to 5 cents American on Nov. 9 during the election. The peso currently sits at 4.9 cents American.

When President-elect Donald Trump claimed the White House in a surprising upset on Nov. 8, many people began to wonder what a Trump presidency might mean for both the U.S. and Arizona economies.

“We are going to make America wealthy again,” Trump said in Bismarck, North Dakota. “You have to be wealthy in order to be great.”

During his campaign, Trump struggled to raise money in the same way his rival Hillary Clinton did. According to the Washington Post, Trump raised about $795 million as of Oct. 19, while Clinton managed to raise $1.3 billion.

Pre-business student Reece Johnson said he thinks it’s impressive that Trump won the election with less money than Clinton.

“Trump’s campaign managers spent their money conservatively and effectively in accordance with their campaign strategy,” Johnson said. “It was multiple times more effective in gaining voters’ support than Clinton’s campaign.”

When the nation began to realize Trump had a good chance of winning throughout election night, the stock market began to decline. Prices fell several percentage points as it became clearer Trump would take the White House.

RELATED: UA students, Tucson community react to Donald Trump's win with 'Not My President' protest

UA economics professor Dirk Mateer said this is because the stock market is afraid of what they can’t predict.

“Stock markets fell initially because they were pricing in a Clinton victory,” Mateer said. “It wasn’t clear who was going to win, and anytime there’s uncertainty in the marketplace, the market tends to react badly to not having good information.”

Despite the initial decline, in the days following the election, the stock market soared to record highs. According to USA Today, the Dow Jones industrial average climbed 3 percent in four days following Trump’s win, exceeding the average 1.4 percent year-end stock market growth following an election.

“The market quickly bounced back because they’re pricing for a Trump presidency—they’re pricing in for policies that’d be pro-growth here in the short term,” Mateer said.

Mateer said the reason Mexico experienced dramatic drops in the peso—from 5.4 to 5 cents American on election—was because of uncertainty. Mexico doesn’t know exactly how a Trump presidency will affect them, and uncertainty devalues their dollar. One of Trump’s biggest campaign talking points was building a wall to rein in illegal immigration. Trump blamed illegal workers for stealing jobs from hard-working, middle-class Americans.

Curt Prendergast, a reporter from the Arizona Daily Star, has spent years covering the U.S.-Mexico border and feels some of Trump’s policies may not be good for Southern Arizona’s economy. 

Prendergast speculates if Trump builds the wall, there’s a good chance the money spent on the wall will go to far-away big business.

“The big dollars go to the big companies,” Prendergast said. “If Donald Trump does give a big contract to build a wall, more than likely it will be based in L.A., New York or Chicago. You’d have good-paying jobs, but they wouldn’t be local.”

Stricter border control could bring a number of well-paid, government-employed Border Patrol agents to Southern Arizona, but according to Prendergast, the government already spends billions of dollars each year to protect the border.

“Those are decent-paying jobs and those people could work down here and live somewhere else,” Prendergast said. “So places like Tucson would get more residents with good-paying jobs and that could dump a bunch of money into Arizona.”

Trump, in his first interview since the election with "60 Minutes," said he plans on deporting 2-3 million people who live in the U.S. illegally. Mateer doesn’t think that’d make a significant difference for Southern Arizona.

“When you look at illegal immigrants, they do the dirty jobs that people in this country aren’t willing to do,” Mateer said. “The fact that they’re undocumented means that they have no leverage in terms of the wage that they could receive. Those jobs would go largely unfilled or they’d be replaced by technology.”

RELATED: Arizona Republicans dash hopes of battleground state

Trump’s desire to change or get rid of  trade agreements like the North American Free Trade Agreement may also impact on Arizona. Trump hopes doing away with NAFTA will force companies to bring jobs from manufacturing plants in Mexico back into the U.S.

“I think his goal would be to bring jobs back to Ohio and Pennsylvania and all those states that have lost manufacturing jobs,” Prendergast said. “If he’s successful in that, then he’s going to pull out all the manufacturing jobs from Sonora, in which case the local Southern Arizona companies depending on that cheap labor would get hurt big time.”

Prendergast believes NAFTA is huge for Southern Arizona. He said if Trump decides to pull out of NAFTA it would “completely redraw the lines of the economy in Southern Arizona,” and it’s impossible to know what would happen in that situation.

“The thing about him [is] it’s very hard to pin down exactly what he’s talking about, so it’s hard to say how everything is going to be affected,” Prendergast said.

Mateer warned that while we may see some economic gains from some of Trump’s policies, it’s possible they may not last. He called Trump’s policies "protectionist" and said, while they’re stimulative in the short run, they will only last until countries like Mexico and China begin to retaliate with tariffs on U.S. products.

“If you thought long-term about the economy you’d say that this is a bad policy,” Mateer said. “But if you thought, ‘I’m Donald Trump, and I want my presidency to succeed in the first couple years,’ then being protectionist is actually pro-economic growth for our nation.”


Follow Nate Airulla on Twitter.



Share this article