Hold onto your hats: As Trump 2.0 nears, we should be afraid. Very afraid.

Bitcoin above US$80,000 and counting. The US dollar exploding. All three major Wall Street indices – Dow, S&P, Nasdaq – hitting record highs, all on the back of Donald Trump’s US re-election victory.

Let’s face it, everyone loves a circus. But will the world economy combust as the United States’ economic policy U-turns under Trumpenomics? And how will this risky, high-wire act impact Australia?

Summer tax holiday

Let’s rewind to January 2017. Barack Obama has just left the White House, and Trumpenomics is now the soup du jour.

On day two of his presidency, Trump withdraws from the Trans-Pacific Partnership (TPP), a 12-country, multicontinental, free-trade pact that has taken eight years to negotiate.

Mere months later, the new Republican administration announces its withdrawal from Obama’s signature policy, the Paris Climate Agreement, signalling Washington’s U-turn back to fossil fuels. The US began to produce so much oil and gas from fracking that, by 2020, it ran out of places to store it.

Then there were both income and corporate tax cuts. In December 2017, Congress passed the Tax Cuts and Jobs Act, which reduced corporate taxes from 35% to a flat 21%. The act included tax cuts for every bracket, except the lowest bracket (10%) for low-wage workers.

This did increase business investment, but there was a sting in the tail – the act devastated the federal budget bottom line, blowing out the deficit by US$1-2 trillion.

But wait, there’s more.

The December 2017 tax cuts also ushered in a major tax holiday, the first since George W. Bush’s 2004 initiative, benefiting US big tech, big oil and big pharmaceutical firms the most.

Eight of the US’s largest tech firms alone held more than US$500 billion in foreign tax havens – in other words, not counting what big oil and big tobacco might have stashed overseas.