Donald Trump’s odds-defying election as the 45th president of the US just five months after Britain’s shock referendum to exit the European Union adds another level of uncertainty to global politics and economics, a predicament that was amply reflected in financial markets worldwide on Wednesday. The nervousness in stock markets probably had less to do with his obnoxious electoral rhetoric as much as a sober assessment of his positions on critical issues — economic growth, equality, immigration and climate change. Little in the campaign of this maverick self-made billionaire with a talent for tax avoidance and evading the truth suggested a credible economic agenda. In his victory speech, he promised a “great economic plan” that would “double economic growth”.
Going by his statements, his growth agenda appears to comprise mainly a low tax rate to attract investment to the US. How does this square with his stated anti-immigrant policy? Why would global companies invest in a country with an expensive, ageing labour force – his core support base – when relatively young and cheap labour is to be hustled back across America’s borders? Again, how would his unabashed protectionism square with rising costs to the ordinary struggling American consumers from “Made in the US” goods and services? For big businesses, the cornerstone of competitiveness remains the cost savings that accrue from outsourcing. Tougher visa rules would hardly help the cause of American corporations. Mr Trump spoke of “infrastructure spending”. Since his speeches rarely mentioned roads, bridges and so on, it can be assumed that this could chiefly comprise the infamous wall along the Mexican border. Against his quote of $12 billion, more reliable estimates suggest a bill of $25 billion. Where will this money come from, given that the US government debt is 104 per cent of GDP? The Affordable Care Act has been Mr Trump’s pet peeve and he vows to scrap President Barack Obama’s signature programme. How this will help working class Americans, for whom he professes to speak, is unclear. Medicare and social security are also rising elements of the federal government’s bill, most of which go to the cohort that supports Mr Trump. Will he cut back here in the interests of keeping out Mexicans?
The limits imposed by the US Budget could also have a sobering impact on his adventurous foreign policy agenda that includes annihilating Islamic terrorists and taking on Russia. On climate change, which he described as a Chinese conspiracy, the world can expect to see unfettered fossil fuel use, a sinister signal for the beleaguered cause of global warming.
For India, the implications of a Trump presidency are also opaque, beyond the vague understanding that, generally, Republicans have been better for India than Democrats. There may be hope in the fact that both the Senate and House of Representatives have Republican majorities; since most of this party is opposed to Mr Trump’s more maverick agendas they could act as a brake on protectionist proclivities that could impact the Indian information technology (IT) industry, which is already running scared from Brexit. In that context, N R Narayana Murthy’s advice that IT firms should focus on strategies to stay relevant in the US injects a rare sense of realism in the midst of this most unrealistic of outcomes.