Trump presidency worries economists
The prospect of a Donald Trump presidency unnerves businesspeople and economists who see him as a reckless novice who might disrupt trade and a struggling global economy.
Financial markets sank today as Trump declared victory following a campaign marked by fiery anti-foreign rhetoric and promises to tear up trade deals, restrict immigration and lock up political rivals.
Trump’s shifting and radical positions on key issues and lack of details such as who might be appointed to Cabinet posts heightened jitters by leaving many uncertain about the direction of the world’s biggest economy and market.
“We simply can’t know what type of President Trump will be,” said Paul Ashworth, chief U.S. economist for Capital Economics, in a report.
“Will he be the demagogue from the campaign trail, who threatened to lock up his political opponents, punish the media, build border walls and start a global trade war?” said Ashford. “Or is he capable of becoming a statesmanlike figure who leads in a more measured manner?”
Due to such uncertainty, risks to global growth will rise as companies wait to see what Washington does, said South Korea’s finance minister, Yoo Il-ho, according to a government statement.
In a victory speech, Trump was conciliatory but pledged to put U.S. interests first.
“I want to tell the world community that while we will always put America’s interests first, we will deal fairly with everyone. With everyone. All people and all other nations,” Trump said. “We will seek common ground, not hostility. Partnership, not conflict.”
Trump’s campaign tapped frustration among American workers who feel hurt by globalization and the loss of well-paid manufacturing jobs.
The celebrity businessman threatened to penalize U.S. firms that shift jobs abroad. Proposals including building a wall along the Mexican border to block immigration resonated with working-class voters who felt abandoned by traditional leaders.
Trump’s success reflects an economic anxiety that governments of many nations need to heed, said James Zimmerman, chairman of the American Chamber of Commerce in China. He said similar strains led to Britain’s vote to leave the European Union, the Arab Spring movement and other jarring political changes.
Trump’s victory was likely to lead to a shift in U.S. Federal Reserve policy.
The Fed had been thought all but certain to hike interest rates in mid-December, reflecting a strengthened U.S. economy. But the uncertainty generated by a Trump victory could prompt the Fed to wait.
An analysis in June by Moody’s Analytics said fully adopting Trump’s proposals on taxes, trade, immigration and government spending would slash U.S. economic output and eliminate 3.5 million jobs. It said the U.S. economy would be “isolated and diminished.”
Other countries also will suffer similar losses if Trump makes good on promises of a more aggressive approach toward China, Germany, Japan, South Korea and other trading partners, economists said.
In Germany, 1.5 million jobs depend on exports to the United States, the country’s biggest trading partner.
