Letter of Transmittal

2nd April, 2017

Lecturer Ahmed Raihan Sadat

Faculty of Business Studies

Bangladesh University of Professionals.

Subject: Submission of group term paper on Financial Implications on USA after Donald Trump
happened

Dear Sir,

We would like to report you that you assigned us with a group term paper for the course Financial
Management (Course Code- FIN 2105) and the topic was Financial Implications on USA after
Donald Trump happened. We have tried our best to work on it and to create a successful term
paper.

We earnestly hope that this term paper will meet your specifications and satisfaction.

Sincerely Yours
Ulfat Murshed Tamanna
Tasmiah Binte Noor
Rifat Ibna Lokman
Khadiza Akter Lima
Bushra Emdad
Section-A
Department of Business Administration in Finance & Banking
 Acknowledgement

This term paper is made possible through the help and support from everyone including our teacher
and friends. Especially, allow us to dedicate our acknowledgement of gratitude toward the following
significant advisors and contributors.

First and foremost, we would like to thank our teacher Ahmed Raihan Sadat for his unconditional
guidance and wisdom as we make our term paper. And we would also thank him for giving us this
term paper topic. This gave us the experience on how to cooperate and engage ourselves in a serious
project.

Finally, we sincerely thank our families for their help and support.

Thank You.
 Executive Summary

Donald trumps term as 45th president, which is due to begin with the inauguration on January 20th,
stands to be one of the discussed moments. Donald trumps campaign promises were aimed at
changes to immigration, trade, taxes and foreign policy. Unemployment would decline at first as
employers hired legal workers to replace their unauthorized workers, but many positions would
have to remain vacant. His call to repeal Obamacare and replace it with a marketplace alternative. If
this bill passed on senate then the annual pocket expense of Americans may increase from $3200
to $5700. Trump has indicated that he will enforce current immigration laws to reduce the
immigrant population through the deportation of undocumented immigrants. Under his proposed
tax reforms, everyone would indeed get a cut. Because of this plan tax rate for middle class and
increased for high class families but overall revenue for government reduced to 4.4 to 7.2 trillion
dollar. America may fall in to the debt trap. Trump has savaged Mexico, whose prosperity and
goodwill matter greatly to Americans southern states. He would have the authority under a variety
of trade statutes to impose higher tariffs which may led to trade war. Trump proposed to bomb ISIS
or even take oil from them arguing itll cut off funding to ISIS. Trumps main motive was to Make
America great Again. But after analyzing Trumps several decisions to this date, it seems that his
motive may remain a myth after all.
 Table of content

1.0 Introduction .................................................................................. 1

1.1. Justification 1
1.2. Research Question 1
1.3. Objectives 1

2.0 Literature Review .........................................................................2-5

2.1. Implication 4-5

3.0 Methodology.................................................................................. 6

4.0 Findings........................................................................................... 7-15

4.1. Overall ups & downs in stock exchange 13-15

5.0 Analysis ...............................................................................................16

6.0 Conclusion .......................................................................................17

7.0 Limitations .......................................................................................18

8.0 References ........................................................................................19

 1.0. Introduction

USA presidential election16 has been the greatest issue around the world for the past several
months. This has been the most discussed and criticized event of all. The American people
chosen the most controversial candidate Donald J. Trump as their 45 th president. Trump won
surprise victory against Democratic opponent Hillary Clinton, despite losing the nationwide
popular vote. He started his journey as president on 20 th January, 2017. Trumps administration
has made a swathe of promises on the economy which has affected America financially.

1.1. Justification

Through this term paper we strive to give the readers a complete illustration of Americas
financial situation after Donald J. Trump happened. Though this term paper is focused on
Americas financial conditions after Donald trump happened, it will also help to know the
implications on the whole global economy.

1.2. Research Question

What background information is necessary to fully understand this topic?

Why this topic is so challenging to solve?

What are the promises Donald Trump has made to Make America Great Again!!!!!!
If Donald Trump acts by his words, what will be the financial consequences on USA?
What does Donald Trumps Presidential victory mean for the economy?

1.3. Objectives
To find out the financial implications that happened under Trumps administration.
To evaluate the capital market fluctuations after Donald Trump became president of
USA.
To evaluate the impact on other countries.
To compare the before and after financial circumstances.

2.0. Literature review

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Donald trumps campaign promises were aimed at changes to immigration, trade, taxes and
foreign policy.
Trumps 10 key promises were-

1. Temporarily ban Muslims from entering the United States:

Following the December 2015 shooting in San Bernardino, Calif., Trump called for "a total and
complete shutdown of Muslims entering the United States. In early May, Trump told the New
York Times the ban would be in place by the end of his first 100 days in office.

2. Full repeal of Obamacare and replace it with a market-based alternative:

Trumps call to repeal Obamacare and replace it with a marketplace alternative is popular among
rank-and-file Republicans. Larger majorities in Congress would be needed for repeal.

3. Cut taxes

Under Trumps proposed tax reforms, everyone would indeed get a cut (The top 0.1 percent
would receive more tax relief than the bottom 60 percent of taxpayers combined.)The campaign
has said the details of his tax plan are subject to change, and would soon announce a new policy.

4. Build a wall and make Mexico pay for it

Trump announced his candidacy with the promise "to build a great, great wall on our southern
border" and "have Mexico pay for that wall," and has repeated the call with conviction and
consistency.

5. Bring manufacturing (jobs) back

Trump has said he will revitalize manufacturing in various iterations (i.e. "Im going to be the
greatest jobs president God ever created.)Trump stated that he will withdraw the United States
from the Trans-Pacific Partnership and renegotiate the terms of NAFTA agreement to get a better
deal for the workers.

6. Impose tariffs on goods made in China and Mexico

Warren Maruyama said President Trump would have the authority under a variety of trade
statutes to impose higher tariffs, but added "it would lead to a trade war and cost hundreds and

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thousands of jobs." Trumps promise violates international trade rules, and hes yet to propose
exiting the World Trade Organization.

7. Renegotiate or withdraw from the North American Free Trade Agreement and Trans-
Pacific Partnership
President Trump would have the authority to bow out of the North American Free Trade
Agreement and the Trans Pacific Partnership. But such a move may not increase American
manufacturing jobs; an expert told us that leverage works in both directions.

8. Renegotiate the Iran deal

Similarly, Trump has a shot at delivering on his promise to "renegotiate with Iran" even though
Iran has said it wont revisit the issue. Mark Dubowitz says "The Iranians are continuing to
negotiate, demanding significant economic concessions". "I have confidence both (Trump and
Clinton) could renegotiate a better deal."

9. Leave Social Security as is

Trump has said repeatedly that voters like Social Security, so it should be left alone. Unlike most
of his primary rivals, Trump vowed to leave the retirement age and benefits intact.
He claims that his economic proposals would preserve Social Security by "making the country
rich again," though thats not supported by multiple analyses.

10. Bomb and/or take the oil from ISIS

Trump proposed to bomb ISIS or even take oil from them arguing itll cut off funding to ISIS.
The United States has already been bombing oil assets under ISIS control for quite some time,
though.
[ CITATION Lin16 \l 1033 ]

2.1. Implications
Page | 3
1. Temporarily ban Muslims from entering the United States:

In January the new US President imposed a controversial 90-day ban on travelers from seven
countries - Iran, Iraq, Libya, Somalia, Sudan, Syria and Yemen.
But after the ban was lifted by the courts, Trump issued a new ban that removed Iraq from the list
of countries affected by the travel ban.
He said: To be clear, this is not a Muslim ban, as the media is falsely reporting. This is not about
religion this is about terror and keeping our country safe.[ CITATION ALI17 \l 1033 ]

2. Full repeal of Obamacare and replace it with a market-based alternative:

Trumps health care bill was issued recently to repeal existing obamacare. Republicans in the US
House of Representatives, short of support from their own party, have withdrawn the healthcare
bill drafted to replace "Obamacare". we are giving some comparisions between obamacare and trumps
healthcare bill:

Category Trumpcare Obamacare

Trump has called for price
transparency under his plan,
Price Transparency
the details of which have not
yet been released.
Trumps plan may include
federal subsidies to help
people buy insurance, but
Cost Assistance
these subsidies would be
based on age rather than
income.
Trump has proposed block-
granting funding to Medicaid,
which means states would get
Medicaid funding
a lump sum of federal money
to fund their programs as they
see fit.
Tax Deductions Under Trumpcare, people
On the marketplaces,
consumers can see pricing
and coverage information in
detail. The ACA has already
made great strides regarding
price transparency.
People who earn up to 4x the
federal poverty line can get
cost assistance to buy
insurance on the marketplace
85% of people who sign
up qualify.
Current Medicaid funding is
based on an open-ended
matching system whereby the
federal government
guarantees at least $1 for
every $1 spent by the state.
Right now, people can only

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 may be able to deduct the full
cost of their health insurance
premiums from their federal
tax returns each year.
Health Savings Accounts,
which are tax-advantaged
Health Savings Accounts medical savings accounts,
would be bolstered under
Trumpcare.
deduct medical expenses if
these costs exceed 10 percent
of the households adjusted
gross income.
Individuals have the option to
use HSAs under Obamacare,
but most people dont
because they require high-
deductible health plans and
significant funding.

[ CITATION htt17 \l 1033 ]

3.0. Methodology

As we had been assigned to conduct a research regarding Financial Implications in USA after
Donald Trump happened, we had conducted this research in the following way.

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Our research methodology is qualitative in nature. We will use secondary source of Data. We will
use different websites to get a clear idea regarding the topic. We will also read certain articles to
understand regarding the research topic and the relative ideas.

4.0. Findings

1. Results of banning Muslim immigration temporarily:

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President trumps controversial immigration plan of six Muslim countries had severe effects on
the countrys economy leading to the capital market. We have identified the implications of
president trumps decision on the nation-
This idea could contribute to a shortage of labor, damaging economic growth and potentially
driving up wages and prices from economists point of view. Deporting that many people would
also lead to a sizable reduction in the countrys labor force. This could lead to a reduction in both
actual and potential GDP growth.

Unsurprisingly, the greatest number of undocumented workers (1.3 million) were employed in
leisure and hospitality, followed by the construction sector, which employed 1.1 million.
Unauthorized workers are responsible for nearly 74 billion dollar in manufacturing output and
billion more in other industries. Such a policy would have significantly adverse effects on the
economy. Unemployment would decline at first as employers hired legal workers to replace their
unauthorized workers, but many positions would have to remain vacant. As the economy's
overall capacity to produce declined, unemployment would increase again, and so would prices.

Donald trumps immigrant ban had effect on USA capital market as the 5 biggest tech companies
lost $32 billion in value. Shares fallen of:

Apple- 0.67%
Alphabet- 2.6%
Amazon- 1%
Facebook- 1.4%
Microsoft- 1.3%

The dollar and stocks around the world fell after President Donald Trump introduced highly
contentious immigration curbs that attracted sharp criticism globally.
In the US, stocks fell the most since the presidential election in November. The Dow Jones
Industrial Average tumbled more than 200 points, retreating below 20,000.Meanwhile the
S&P 500 dropped 1 per cent, with energy and financial leading decliners.

The dollar index fell around 0.3 per cent, according to Reuters, and the dollar declined around
0.7 per cent against Japans yen.

2. Failure of Trumps healthcare bill:

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According to obamacare this is the present situation of Americans whos having health care
insurance-

Here we can see 66.7% Americans are having private insurance plan for healthcare. The main
problem with this private plan is it is too much expensive.

Under Trumpcare, people may be able to deduct the full cost of their health insurance premiums
from their federal tax returns each year. But this is beneficial only for the higher income people
because those arent tax credits. Other middle class people will face negative consequence
regarding healthcare insurance under trumpcare. Moreover Trumcare would have resulted in 24
million Americans losing their insurance. If this bill passed on senate then the annual pocket
expense of Americans may increase from $3200 to $5700.

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 21st March17

After the failure of trumpcare theres a drastic change in the stock market of America. From the
above chart it is visible that there is fall down after 21st March17, the failure date.

3. Cut taxes:
If it is thought that the health care was tough to conquer, achieving American tax reform is like
slaying a savage beast in a dark. First of all lets see the current tax plan. According to current
plan:

Current tax payment :

Annual Earning ($) Taxed Effective Tax Rate

1,000,000 287,250 33.6%
300,000 66,424 22%
52,000 553 1%
Too few Americans are working, too many jobs have been shipped overseas, and too many
middle class families cannot make ends meet. According to Trumps plan this tax plan directly
meets these challenges with four simple goals:

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i) Tax relief for middle class Americans: In order to achieve the American dream, let people
keep more money in their pockets and increase after-tax wages.

ii) Simplify the tax code to reduce the headaches Americans face in preparing their taxes and let
everyone keep more of their money.

iii) Grow the American economy by discouraging corporate inversions, adding a huge number
of new jobs, and making America globally competitive again.

iv) Doesnt add to our debt and deficit, which are already too large.

Trumps reformed tax payment :

Annual Earning ($) Taxed Effective Tax Rate

1,000,000 336,435 >33.6%
300,000 46,350 <22%
52,000 400 <1%

Under this plan its visible that mid class and low class familys tax rate deducts by a large
percentage and high class familys tax rate increased a little.

Reforming points that Trump wants to bring under his plan:

Deductible tax for married couples up to $200,000 per year

Deductible child care expense
Personal exemptions ($4050 per member of a family)
Corporate tax reduced to 15% from 35%

Probable Consequence:

Though this plan decreased the tax rate for middle class and increased for high class families but
overall revenue for government reduced to 4.4 to 7.2 trillion dollar. America may fall in to the
debt trap. A research shows in next 10 years Americas debt will increase by 2 trillion dollar
under Trumps plan. Americas debt rate compare to their total GDP in 77% but if Trumps
reformed plan happens America may face 110% debt compare to GDP which is alarming.

As the tax rate is a little bit lower, investment may increase which may led to growth in their
income by 2%.

4. Impose tariffs on goods made in China and Mexico :

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Donald trump has raised a fear on imposing tariff on all imports into the United State while the
decision is not final. The tariff could be implemented through an executive order in the early
days of the Trump presidency. In announcing the deal, he warned that other companies who
moved jobs overseas would face "consequences".

The US is the top destination for British exports 46 billion in goods entered the US in 2015.If
Trump were to attempt to implement new tariffs on imports, the US would be likely to face
retaliatory measures from its trading partners. Imposing tariff would lead to trade war. Parts for
consumer items are made abroad, so increasing tariffs could make it more expensive to import ,
thus many production cost could also increases. To protect corporate profits and margins,
companies could hike prices, which is not ideal for consumers. A tariff may also effect the GDP
growth of US economy.

Assuming a 15% tariff on Chinese imports and a 7% tariff on Mexican imports modestly
above their current levels of 2-10%, depending on the good and US would see a 0.5% reduction
in annual GDP growth in just the next year.

5. Renegotiate or withdraw from the North American Free Trade Agreement(NAFTA)

and Trans-Pacific Partnership(TPP)

Withdrawing from NAFTA would not be a smooth process. It would require loads of American
businesses bringing exiting components of their supply chains and outsourced services back
onshore to avoid tariffs or other penalties- a process that takes time and money. It would also
potentially increase costs for those businesses going forward.

Both documents have something in common. They focus on the needs and interests of
corporations, not individuals. That isn't necessarily unreasonable on its face. Businesses are
generally the ones involved in international trade, and governments typically want to support the
interests of their own companies.

6. Bomb and/or take the oil from ISIS

The oil ISIS pumped and sold from the lands it has seized in Iraq and Syria. Oil sales are the
ISISs single most important source of income, ISIS has been selling up to 40,000 barrels a

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day, generating $1 million or more every 24 hours. Impeding ISISs generation of money could
decline global terrorism.

7. Renegotiate the Iran deal

Renegotiating or withdrawing the Iran deal will harm U.S. interests and could even lead to an
international crisis.

8. Build a wall and make Mexico pay for it

When Donald Trump speaks of the Great Wall he would build between the United States and
Mexico, he fails to account for a few inconvenient facts.
For instance, there are millions of men, women, and children who live in communities that fall
on both sides of the international boundary. There are millions of tourists, workers, students, and
entrepreneurs who cross the border each day. And there are the billions of dollars in two-way
trade that sustain millions of U.S. jobs.
Not surprisingly, were Trump to forge ahead with his plan to create an impenetrable border
between two economically and socially integrated countries, he would destroyor, at best,
severely damagethese connections at an enormous humanitarian and economic cost. Likewise
with his related plan to clear the United States of all undocumented immigrants, which would
subtract millions of workers and consumers from the U.S. economy.
Lets consider a few facts about the U.S.-Mexico relationship that never make their way into the
Great Wall rhetoric:
The total value of U.S.-Mexico trade is more than $1 billion every day.
More than 13 million Mexicans traveled to the United States in 2010, spending $8.7
billion.
Roughly 6 million U.S. jobs are sustained by trade with Mexico.
More than 20 percent of all U.S. jobs are tied in some way to trade along the border.
If the wall is built, all these issues will face uncertainty.

4.1. Overall Ups and Downs in stock exchange

Donald trumps inauguration happened on 20th January, 2017. From then till now NYSE saw
many ups and downs. There are three popular measure for NYSE. These are:

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DOW: The Dow Jones Industrial Average (DJIA) is a price-weighted average of 30 significant
stocks traded on the New York Stock Exchange (NYSE).

NASDAQ: The Nasdaq Stock Market is an American stock exchange. It is the second-largest
exchange in the world by market capitalization, behind only the New York Stock Exchange.

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S&P 500: The Standard & Poor's 500, often abbreviated as the S&P 500, or just "the S&P", is an
American stock market index based on the market capitalizations of 500 large companies having
common stock listed on the NYSE or NASDAQ.

From the charts we can see that though there were many ups and downs but NYSE & NASDAQ
had a noticeable growth. DOW reached 20,000 points for the first time under Trumps
administration. Recently after the failure of Trumpcare NSYE & NASDAQ saw a fall down
from the last week of March and afterwards.

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 5.0. Analysis

Through a controversial election Donald Trump became the president of United States of
America. This victory led to a sudden boom at USAs stock exchanges. The Dow Jones Industrial
Average (DJIA) reached 20,000 points for the first time. For the first time the investors initially
thought that Trump could lead America to a greater path. But Trump didnt live up to their
expectations for long.
During his early period of presidency Trump took an irrational and arbitrary decision of banning
travelers from six Muslim countries temporarily. The tech industrys stock fell severely and
DOW, NASDAQ and S&P500 lost some points. Because of this decision US stock exchanges
faced ups and downs which could have created financial crisis. Economic fluctuation was
obvious as this deportation would lead to a sizable reduction in the countrys labor force and in
both actual and potential GDP growth.
Trump took another major decision by passing a bill to repeal and reform existing Obamacare.
The bill was not passed due to lack of votes from Republicans. If this bill was enacted, 24

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million Americans would be deprived of health insurance benefit and annual pocket expense
would have increased from $3200 to $5700.
Recently Trump stated that he would go for a tax reform. If reformed tax revenue will decrease
by $4.4 to $7.2 trillion in next ten years, which may put America in debt spiral (in amount $2
trillion).
By demonstrating the plan of building a wall between USA and Mexico, Trump spread
extremism throughout the world. This wall would deteriorate USA-Mexico trade relationship and
would create unemployment.
Trumps main motive was to Make America great Again. But after analyzing Trumps several
decisions to this date, it seems that his motive may remain a myth after all.

6.0. Conclusion

Initially we presented some significant election promises made by Donald Trump. Among these
promises Trumps administration has implemented some of the policies. We have tried to
demonstrate the financial implications these policies had on USA. We have also shown the
probable effects of the policies have not yet been taken. Donald Trumps decisions have effects
not only on USA stock market but also on global economy. The consequences can be proven as
fatal for national growth of USA.

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 7.0. Limitations
Donald Trump elected as a president only 3 months ago. Theres little we could find
regarding this matter.
Lack of enough human resource.
Our analysis could have been more accurate if there wasnt any time constraints.
Lack of reliable information.
Lack of prior research studies on the topic.

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 8.0. References
FOSTER, A. (2017, 03 21). www.express.co.uk. Retrieved from www.express.co.uk:
http://www.express.co.uk/news/world/761087/Donald-Trump-immigration-ban-what-seven-
countries-reasons-US-banning-Muslim-travellers

https://trumpcare.com. (2017, 03 17). Retrieved from https://trumpcare.com:

https://trumpcare.com/trumpcare-vs-obamacare/

Qiu, L. (2016, 07 16). www.politifact.com. Retrieved from www.politifact.com:

http://www.politifact.com/truth-o-meter/article/2016/jul/15/donald-trumps-top-10-campaign-
promises/

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