Labor Share
Trump’s positions on immigration and trade, though ranging from wrong-headed to outrageous, are popular, at least in part, because voters in middle- and lower-income groups have seen their share of the pie decline, not for years, but for decades.
Wages and salaries are now 43.8 percent of GDP, up very slightly from all-time lows in 2010 but still in a long-term downtrend which started above 50 percent in 1969. (https://research.stlouisfed.org/fred2/graph/?g=2Xa)
Corporate profit margins have moved in roughly the opposite direction, upward, for roughly the same amount of time and are now not far off of all-time highs.
Globalization has been great for capital and for people at the very top in the U.S. with the skills to surf its wave. That it has also been good for many in India, Mexico and China who have been lifted out of poverty is not a point which will get much airing between now and November.
What may well get more attention are policies which might protect U.S. jobs, or which might raise U.S. wages, especially in the bottom 80 percent which globalization has hurt. Within this context, it may not be a surprise that the U.S. just imposed a 266 percent tariff on imports of some steel from China and a lesser range of tariffs on six other countries.
Though I wouldn’t expect a trade war from a Clinton administration, it will be keen to be seen to be willing to fight the corner of U.S. wage earners, and perhaps less sensitive to the competing demands of multinational corporations. I cannot imagine a Clinton administration approaching a trade deal in the same corporate-friendly spirit as the Obama White House took to the Trans-Pacific Partnership.
Taxation too will probably be more redistributive than in a world where Trump elected to stay home. Trump’s longest-lasting legacy might be that he leaves Republican economic orthodoxy of low taxes and hope for growth fatally wounded.
These outcomes may be for good or ill, but what they will be is bad for corporate profit margins in aggregate.