16th November 2022
A mere week after a set of mid-term election results which fell well short of the expectations of the Republican Party and most independent commentators alike, Donald Trump has formally confirmed his intention to seek a return to the White House at the 2024 presidential election.

Trump two? What a second Trump administration might mean for private equity

Were he to win he would become only the second individual to hold non-sequential terms as American President (the other being Grover Cleveland from 1885-1889 and 1893-1897). It is also entirely possible if he prevailed that he would become the first occupant of the Oval Office to carry the electoral college but lose the popular vote in two separate elections. The mere fact that he is running at all is in itself a political novelty. Defeated ex-Presidents rarely resurface at the ballot box although Gerald Ford did seriously contemplate serving as Ronald Reagan’s vice-presidential candidate in 1980 before the ex-Governor of California decided that the notion which Mr Ford was floating of an arrangement akin to that of a “co-presidency” was not what he wanted at all and he turned to George H.W. Bush instead. Like so many matters related to Donald J. Trump, precedent is not of much assistance to analysis.

Why is he declaring now?

This is an unusually early move even by the standards of American politics where the “permanent campaign” has come to be seen as a feature of electoral life. Ordinarily, it is lesser-known figures who declare early in the political cycle because they need time to establish their identity with voters and to raise the money required to finance a serious presidential bid. Mr Trump has universal name recognition and has access to funding from his supporters that is second to none without the need to dip into his own deep reserves to keep his campaign afloat fiscally (indeed there is real evidence to suggest that his initial 2016 presidential campaign may actually have netted him a profit). There was no obligation for Mr Trump to show his hand as he has, especially in the light of a series of races in the Senate where the contenders whom he endorsed were decisively rejected by their electorate. This is a matter of choice and of calculation rather than any sort of compulsion imposed upon him.

The decision is, though, logical. By throwing his hat in the ring, the former President believes that at a minimum he will smoke his potential rivals out sooner than they would have ideally wanted and at a maximum will intimidate some of those figures into not standing at all. He has effectively forced the pace of the Republican primary election process and shifted the political narrative so that he will be widely seen as the presumptive nominee with more than 18 months yet to pass before the party nominating convention (due to be held at the Fiserv Forum in Milwaukee, Wisconsin), with most of the mainstream media portraying his re-selection as highly likely, if not close to an inevitability. This is an exaggeration of the situation but one which has the capacity to prove a self-fulfilling prophesy.

Will he be the nominee?

Despite the lacklustre Republican performance in the 2022 elections which is likely to leave them with a very small majority in the House of Representatives (220-222 seats versus 213-215 for the Democrats) and at best tied in the Senate if their candidate wins the run-off race in Georgia on December 5th (with Vice President Kamala Harris holding the casting vote), Mr Trump is a clear favourite to recapture the nomination. A majority of Republican voters may well tell pollsters that they would prefer him not to put his name forward, but the intensity of his core support is such that he would be very difficult to beat. There are only three circumstances in which he might be derailed.

The first is if his legal difficulties become significantly worse and he is indicted or even put on trial during the primary election season (not that this seems to have sunk Binyamin Netanyahu or his Likud Party in Israel). The most prominent of the cases being investigated against him (in New York) involves the accusation that he exaggerated the value of his property empire to those who he wanted to lend the Trump organisation money, which is surely an example of caveat emptor rather than the sort of story or scandal that could lead to a prosecution and an appearance in a courtroom. In a similar vein, the various attempts to link his behaviour to the riot at the Capitol on January 6th 2021 are likely to result in a hardening of opinion for or against him rather than admirers of his switching away from him. The legal profession will need to come up with something better to bring him down.

Private equity should, in the spirit of the Scouts, Be Prepared. There is a significant chance that Mr Trump will be the Republican nominee and in the right circumstances return to the Oval Office.

The second is if the field running against him is very narrow, very quickly. Mr Trump benefited hugely in 2016 from the fact that there were at one stage 17 different Republican aspirants running as well as him which meant that the anti-Trump (or simply non-Trump) vote was sliced up and could not unify around a specific alternative to him. It is unlikely that there will be anything like that tally of prospective Republican contenders this time. Besides Trump there have been three figures who have done the necessary preparation for a presidential bid, namely ex-Vice President Mike Pence, former Secretary of State Mike Pompeo and the re-elected Governor of Florida, Ron DeSantis.

If either Mr Pence or Mr DeSantis were willing not to contest the race and to recommend to those who might have supported them if they had stood that they back the other rival to Mr Trump, then that would represent a significant complication for the ex-President. The withdrawal of Mr Pompeo, by contrast, would probably have less impact as he looks like a weaker choice for the anti-Trump vote to embrace. It is not impossible that this might happen. Mr DeSantis has a real day job to do and as he is only 44 years old, time is on his side. He could serve out a full second term as the Florida Governor and then think about making the race in 2028 instead. Mr Pence, on the other hand, really needs to stand this time if he is going to bid for the White House at any point. The bigger the field the better as far as the Trump camp is concerned. This is reinforced by the fact that most state Republican parties award whoever comes first in their election an additional bonus in terms of extra delegates (or award the whole lot of them on a “winner takes all” basis) whereas the system within the Democratic Party involves a larger element of proportional representation to it.

The final possible burden for the Trump campaign machine is that the opening event is the Iowa caucus. A caucus attracts a much lower turnout than a primary (it is a public meeting lasting some time that has to be attended in person, not simply a dash into a polling station to cast a vote). The citizens of Iowa are accustomed to being personally wooed by candidates on an individual basis, whereas Mr Trump’s preferred form of campaigning involves massive rallies of adoring crowds. He almost came third in Iowa in 2016 (behind Senators Cruz and Rubio) and it is conceivable that a well-organised opponent who spent lots of time on the ground in the state may cause an upset outcome.

Would he win the election?

That is very hard to tell this far out. The working assumption has to be that Joe Biden will aspire to a second term in office. As of now, he is unpopular but not as disliked as Mr Trump. The most recent average of his approval rating suggests that he has a 43.8% positive rating and a 52.2% negative rating and hence a score of minus 8.4 points. Mr Trump has a lower positive score (41.6%) and a higher negative score (53.6%) for an overall tally of minus 12 points. This is not a vast difference and it is certainly one which if the economy were to stagnate over the next two years could be changed.

There is also an elephant in the room (it should be a donkey really) in terms of a Biden 2024 effort. He will be almost 82 at the time of the next presidential election and would be 86 by the hour that he left office in January 2029 were he to be re-elected. That is troubling. But if not Mr Biden then who? The obvious answer is Vice President Harris, but she is more unpopular than the President or the ex-President (37.2% approve, 53.4% disapprove, a net negative score of 16.2 points). The only way in which her standing might be transformed is if Mr Biden not only declined the chance of re-election but stood down from his office on health grounds allowing Ms Harris to become the President and perhaps by virtue of how she performed as an incumbent increase her standing with the US public. If not, then despite the age issue (which is plainly a real one) it would be a Biden-Trump contest with an enormous amount depending on precisely how the United States feels about itself in late 2024.

How would a Trump Mark II presidency differ from Trump Mark I?

There would be a number of respects in which a second Trump presidency would be, perhaps quite subtly, distinctive from that which was witnessed between January 2017 and January 2021.

The political context

When Mr Trump was first elected in November 2016 by a reasonably comfortable margin in the electoral college (if 2.1% behind in the popular vote) then there was the possibility that he would serve for two full terms as President. If he is restored to the Oval Office in January 2025 it will be without the prospect of an additional tenure beyond 2029 and hence he will be to some degree a “lame duck” from the very moment that his second (non-consecutive) tenure starts. This would make him a weaker figure in Washington DC than he was when he first arrived to become President.

It is also likely that he will have more modest backing in Congress the second time round than he did in 2017. The Republicans then had a reasonable margin in the House of Representatives (241 R to 194 D) and a 53-47 edge in the Senate. The results last week mean that even if Trump won a second term then it would be with a much more fragile majority in the House of Representatives (it is not inconceivable that the chamber could move back over to the Democrats in 2024 even with a Trump victory if the party were again to carry the popular vote) and the chances of the Republicans losing their majority in the House (if it exists) in November 2026 would be high. The Senate outlook is different. In 2024 the Democrats and two independents in Maine and Vermont who align with them will have to try to defend 23 of the 34 Senate seats up for re-election, while the Republicans have to hold on to just 11 of those seats (which in any case are mostly in very favourable territory for them). Hence there is a strong chance that the Senate will move back into the Republican column even if Mr Biden is the ultimate victor and surely will do if Mr Trump manages to stage a political comeback. Whether Republicans can keep the Senate in the 2026 elections depends on their margin in 2024.

In any case, it would appear very plausible that the Republicans were they to control the executive and both branches of the legislature after the 2024 elections would have less room for political error than was true particularly for the 2017-2019 period during the opening Trump Administration. This would set limits on what the President could do if his objectives required congressional approval.


The area of appointments is the one where the difference between a first and second Trump White House might well be the most substantial. Mr Trump did not really expect to be elected in 2016. He also had minimal experience of Washington politics. He made some appointments which were very much of his personal political whim in the White House staff (such as his daughter and son-in-law) but in many other respects he deferred to the Republican establishment in choosing his Cabinet members and Oval Office aides with the curious quirk of also raiding the military for his nominees.

It is pretty safe to predict that history will not be repeating itself on that score. Mr Trump’s choice of Vice President might be driven by electoral pragmatism. His weakness in 2020 (and still as of now) is with white suburban women. He may decide to blunt this by choosing a Vice President who has an appeal to this segment of the US electorate such as Nikki Haley, the ex-Governor of South Carolina and his first choice as US Ambassador to the United Nations when he was originally inaugurated.

In all other respects, personal loyalty to Mr Trump will be far more important than party stature in deciding who takes the most senior roles within the Cabinet and who will be the key players in the room when decisions are made in the White House. There will be far fewer internal checks and balances as a consequence. Keeping the wider party happy will not be a priority for Mr Trump. Keeping himself happy will be much more compelling. This could make for some rather abrasive relationships with even the Republicans in Congress (never mind the Democrats) and could make for some awkward experiences for the diplomatic service and international leaders dealing with the US.

The most important other appointments that Mr Trump can make will be at the Federal Reserve and the Supreme Court. He will favour mavericks in the case of the former and unambiguously staunch conservatives for the latter. It was his third appointment to the Supreme Court – Amy Coney Barrett – who ensured the demise of Roe v Wade earlier this year. If Mr Trump is elected for a second term then it is very likely that Clarence Thomas (who by 2025 will have been on the court for 34 years) will stand down and be replaced (assuming the Republicans control the Senate) by another conservative Black judge (the field is larger in that regard today than it was in the early 1990s). It is also possible that Chief Justice John Roberts may retire after more than 20 years on the bench with Ms Barrett selected to replace him and another reliable conservative actor nominated to fill her current slot.

Domestic policy

In many respects, despite all the noise and fury Mr Trump proved to be a relatively conventional Republican President in domestic policy. This was partly because his party restrained him. He was, for example, in favour of abolishing the carried interest provisions which private equity benefits from but instead settled for accepting an extension of the hold period (on a deal-by-deal basis not a whole fund assessment) from 12 months to three years (a not insignificant change but clearly not on the same scale as the outright abolition of carry). His main legislative achievement in domestic terms was a sizeable tax cut enacted in late 2017 and his principal failure was his inability to convince even a Republican-controlled Congress to finance a proposed wall between the United States and Mexico.

He will probably look for another tax cut if he returns to the White House but that will be harder to realise with smaller Republican numbers in Congress and larger deficits. If enacted, it may be small and symbolic. He may have more luck with his wall at the second time of asking as there is more of a sense of a crisis about illegal immigration to the US since he left office and a feeling that the Biden team has taken its eye off that ball. A version of a wall may be the main Trump triumph if restored.

Foreign policy

All second term presidents tend to focus more on foreign policy in their final years in office and it is likely that this would be true for Mr Trump as well. Restraining influences on him will be weaker. He is likely to be more vocal about and more inclined to act upon his “America First” instincts than was often true between 2017 and 2021 when his appointees attempted to limit his rhetorical damage. Quite how he will handle Russia will depend on what political condition Vladimir Putin is in (if he is still President) in 2025. He will certainly be more hostile to China than he was in his first term. He will want to revisit both his alliances in the Middle East that led to the Abraham Accords (arguably his biggest single international achievement) and ramp up his opposition to the regime in Iran and he may also decide to revisit his attempt at a political understanding with North Korea where his own aides sought to undermine any such accord with Pyongyang at the first time of trying. Europe will not be very important to him. Latin America and Africa can expect a resumed level of disinterest.

It is international trade where the Trump Effect might really be most serious. Mr Trump’s instincts are unapologetically protectionist (in sharp contrast to all other Republican Presidents from Dwight D. Eisenhower onwards) and the United States has the means of shutting down any prospect of an agreed international approach to open trading. Even a US-UK free trade deal on favourable terms to Washington might not be a realistic option. Trade will have to await the end of any Trump return.

Private equity should, in the spirit of the Scouts, Be Prepared. There is a significant chance that Mr Trump will be the Republican nominee and in the right circumstances return to the Oval Office. The main differences that this would make are in appointments to senior positions in the domestic and overseas theatres and in the atmosphere in which international trade is undertaken. It may or may not be a case of “Make America Great Again (II)”. It would be one of “Fasten Your Seat Belts”.