Is Donald Trump a Bigger threat to global economy than Brexit?

Philip Lowe, Reserve Bank governor, states that the victory of Donald Trump in the United States presidential election might be a bigger shock for the financial markets as compared to the Brexit vote in June 2016. The principal global apprehension is the threat of intensifying protectionism and a decline in globalisation support, added Dr. Lowe.

The United Kingdom, exports £30bn of goods and services to the United States, a little more than what is sold to Germany and about four times of what the United Kingdom sends to China. It is an imperative market, and necessary that the trade should continue. In the United States, Trump wants to boost the economy through aggressive tax cuts but this may not work. On a whole, seeing the scale of the United States national debt, and primary issues of competiveness, it seems doubtful that Trump’s policies and working style would enable in market expansion, and it will be difficult for vital markets in the short run.

Top 10 United Kingdom exports to the United States:

• Animal and vegetable oils, fats and waxes
• Beverages and tobacco
• Commodities
• Crude materials
• Chemicals and related products
• Food and live animals
• Miscellaneous manufactured goods
• Manufactured goods
• Machinery and transport equipment
• Mineral fuels, lubricants and related materials

To assess what Trump would do post Brexit is a tricky call. Post the Brexit result, Donald Trump states that it is “a great victory”. It’s apt to say that Trump’s move towards “America First” trade policy and a free movement of individual might impose a risk to the global job economy and a wall for Mexicans to come in. It is evident that Trump’s policy would mean a huge wall across the United States-Mexico border. His acknowledged goals can be very detrimental for foreign economies and impose the biggest geopolitical risk of the past years. All of a sudden the world is working in the other direction; the economy is subjugated by elections. Few other economic risks are:

Protectionism

Donald Trump policies set the United States apart from the rest of the world, shielding local industries and closing borders. Curbing trade growth would knock off growth in the United States and the rest of the world. In a bid to support United States-manufactured goods, barrier on trade with China might harm Americans with high cost of goods and reduced options and quality.

Immigration

His policy to deport all undocumented immigrants from the United States would harm the United States economy by taking out a lot of people from the labour market. Recent studies predict that there are approximately 168,000 such people residing in the United States. He also aims to suspend immigration from terror-prone regions where inspection cannot be carried out safely. Mr. Trump claimed that the government does not know the refugees it permitted to come in from the country, despite their being scrutinised for two years before being allowed to enter the United States. Though the terms are unclear, Syria would definitely be on the list.

Foreign Policy

Donald Trump states that he cannot assure safety to fellow NATO countries that come under attack. In an interview, he stated that the United States would extend help only if the country has fulfilled its responsibility within the alliance. Supporting an “America first” view, Trump also threatens to withdraw troops from Asia and Europe, if those associated fail to pay more for American protection. Mr. Trump has flip-flopped on key issues including Syria. He has pledged to bomb the hell out of the Islamic State of the Levant, importantly Iraq. Trump policies are likely to route anxiety into the economy, sideline capital, discourage hiring and shave points off the GDP.

Energy / environment and climate change

In excess of 50% of the oxygen is supplied by the phytoplankton of the oceans. The effect of climate change could be far more catastrophic than flooding of coastal cities and social disturbance caused by collapsing economies. Increased ocean temperatures and oceans changing from alkaline to acidic, and, the process could suffocate humanity. Trump has denied the clear science on this issue. Also, Donald trump plans to cancel billions of dollars in payments to the United Nations climate change programs. He plans to redirect the funds to pay for infrastructure projects in the United States. He also promised to lift restrictions on fracking and boost American oil and natural gas production.

Nuclear Weapons

With nine nuclear power nations, Trump is showing a clear indication of threat, suggesting nuclear weapons to Japan and South Korea.
Few of Trump’s supporters believe that his policies would be a blow to the left-wing campaigners, that his administration would swiftly reverse the post-Ferguson crime increase. In reality, Trump’s election would be a gift to bad cops and riot-ready radicals in equal measure.

Swab Barack Obama from the history books

One of Trump’s prime actions will be to erase the effect of Mr. Obama’s presidency. The Republican candidate has given his word to cancel each memorandum, and executive action order issued by President Obama. Chief among these reforms is the Affordable Care Act (ACA) or the Obamacare, the policy that has brought health insurance to around 12.7 million people who were struggling to afford medical cover. Donald Trump plans to replace this with another system, the “Health Savings Accounts”.  Under this plan, the state would have more power over how to handle funds. However, Trump’s campaign has failed to explain how it will be different from Mr. Obama’s healthcare plan, and how would implemented.

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