President Trump considers himself God’s gift to the stock market. If the House of Representatives were to impeach him, “markets would crash,” Trump tweeted on Sept. 26.
Markets, however, seem unperturbed by Trump’s worsening political predicament and the growing odds the House will, in fact, impeach him. In fact, if Trump were to exit the scene—either by resigning or being driven from office—stocks would probably soar rather than plunge, as investors got relief from elements of Trump’s agenda that have been depressing markets for over a year.
Trump may be going nowhere. He’s obviously a fighter, and it’s not even clear impeachment proceedings will harm him. When the House impeached Bill Clinton in 1998, his popularity improved, largely because voters saw him as the victim of political overreach by Republicans. The same could happen to Trump.
But Trump is arguably in a tougher spot than Clinton, whose offense was lying about an extramarital affair under oath. Trump appears to have subordinated national security concerns to his personal political interests and used taxpayer aid money appropriated by Congress as a kind of bribe to goad Ukraine into digging up dirt on Joe Biden. Then there appeared to be some kind of White House effort to cover it all up. Foreign policy and national security are core presidential responsibilities, and Trump may have badly abused his power.
Trump could probably survive impeachment. If the Senate wouldn’t follow up by voting to convict him—which requires a two-thirds vote—Trump would remain in office, as Clinton did for the remainder of his second term. But this is treacherous terrain for Trump. Republican senators might not be as captive to Trump on impeachment as they have been on other issues. If the Senate did convict Trump and he left office, they wouldn’t be handing the presidency to Democrats. They’d be trading Trump for Vice President Mike Pence, who would become president. If they’re able to do that in one fell swoop, the many Republican senators who supposedly revile Trump in private might just go for it.
How would markets react?
So if Trump left, how would stock markets react? Euphorically. From a business perspective, the best of the Trump agenda—tax cuts and deregulation—would remain in place. But the worst of the Trump agenda—tariffs, protectionism, xenophobia and political interference with the free market—would dissipate. It might take a couple hours for markets to sort it out, but replacing Trump with Pence would almost certainly cheer investors.
Before he was a Trump yes-man, Pence was a more traditional Republican, supportive of free trade and limited government. He probably wouldn’t abandon everything Trump stands for, but he’d probably ditch the worst of it, including:
Tariffs. Trump is almost alone among Republicans in his crusade to wall off the U.S. economy, cut down on trade and punish trading partners with tariffs—which also hurt the U.S. economy. Pence might look for other ways to keep the pressure on China, such as coordinating with allies to reform the World Trade Organization. But it’s hard to imagine he or any other Republican would keep the Trump tariffs in place at the levels they’re at now. This is the single-biggest policy cloud hanging over markets, which would rally if the clouds parted.
Immigration. A tough stance on illegal immigration is popular among conservatives, but Pence could ease up on legal immigration and raise quotas or find other ways to let more people legally migrate to the United States. Many economists say we need more legal immigration, not less, to deal with labor shortages, boost entrepreneurship and expand a labor force that must finance Social Security and Medicare for the baby boomers. Pence would probably be friendlier to immigrants than Trump has been. Anybody, actually, would be friendlier to immigrants than Trump has been.
Iran. Tearing up the Obama-era nuclear deal with Iran was Trump’s idea. Many Republicans would have been content to leave it in place. Trump’s new sanctions on Iran have hurt the country but have also made Iran more combative, leading to strikes on oil operations including the recent drone and missile attack on Saudi facilities. Pence could start over with Iran and find a new path forward that’s less threatening to world oil markets.
Scandal. Pence is an evangelical social conservative out of step with the public on some issues, but he’s also straight-laced and far more ethical than Trump. The many Trump scandals involving self-dealing, lies, coverups and abuse of power would dry up under Pence. The Trump scandals haven’t dinged financial markets, but they have exhausted and soured many voters. Any reprieve ought to be welcome.
Rick Newman is the author of four books, including “Rebounders: How Winners Pivot from Setback to Success.” Follow him on Twitter: @rickjnewman. Confidential tip line: email@example.com. Encrypted communication available. Click here to get Rick’s stories by email.