“Stunned”; “shocked”; “surprised” blared the global corporate media after the victory of Donald Trump in the 8 November US Presidential Election was declared. Effectively this was a BREXIT II for Trump as the headline polls consistently favouring Mrs Clinton and fed to the public, day after day, on TV, internet, radio and in the print media were once again proven wrong or even worse manipulated.
In reality the shock was that the polls were wrong not the fact that Mr Trump won by concentrating his efforts on key battleground states whose economies had been devastated since the 1994 inception of NAFTA and jobs exported south of the Rio Grande, followed by a further wave of manufacturing job losses to China.
Ignoring the headline polls almost guaranteeing victory to Mrs Clinton, the polls in key battleground states told a different story, especially in the so-called Rust Belt – Michigan, Wisconsin, for example. It is not the popular vote that counts in the US but the Electoral College Votes. So Mrs Clinto repeated Al Gore’s bitter experience in the 2000 election – both won the popular vote but lost the keys to the White House.
Knee jerk reactions
Global stock market fell sharply when Mr Trump’s victory was announced – except for Russia where Mr Trump has an 82% approval rating. The same media that has supported Mrs Clinton pointed out that Mr Trump would be bad for the economy – “look at the markets”. But this knee jerk reaction of putting pen to paper too quickly has left many with egg on their face as the Dow Jones hit historical highs on the 9 and 10 November in apparent celebration of Mr Trump´s victory and future economic policies.
Even the renowned economist Paul Krugman fell into the same trap when seeing the Dow Futures fall 900 points when he said, “If the question is when markets will recover, a first-pass answer is never.” As Mr Krugman writes for the New York Times that managed to discredit itself with its totally biased and partisan support of Mrs Clinton and negative appraisal of anything and everything to do with Mr Trump. This extreme statement is hardly surprising and a mere continuation of the negatives continually published in the pages of the NYT against the now President Elect.
Forbes predicts that the retail industry will largely suffer due to Mr Trump’s presidency. The publication claims that both small and large purchases will stall as the market is in a state of “paralysis.” As this opinion was written in the immediate aftermath of Trump’s triumph, how does Forbes square this with the startling rise in the major US stock indices? It would be interesting to know.
During the presidential campaign Mr Trump’s clear message was to reshore jobs lost in the wake of globalization and free trade deals that had negatively impacted the US job market especially in the manufacturing sector. To achieve this he will have to lower corporate taxes to 15% and increase import taxes on goods manufactured abroad – even by US multinationals that have offshored their factories in Mexico and Asia.
The net result could be at best a renegotiation of NAFTA and CAFTA or a cancellation of these free trade agreements (FTAs). The TTP could suffer the same fate and the TTIP with Europe could never get off the ground.
Thus, free trade as it is known – even though these FTAs are governed by thousands of pages of rules and regulations that can hardly be defined as “free” – will take a back seat to generating jobs in the US and regalvanising the Rust Belt. 15% corporate taxes and at least a 35% import tax does not make it worthwhile for US companies to manufacture abroad despite lower hourly wages.
The whole pattern of global trade could be affected heralding in an age of protectionism characterized by high import tariffs. Less than a month ago the Obama administration levied a 73.5% import tariff on Chinese steel as the metal was allegedly being dumped in the US market.
The Footwear Distributors & Retailers of America (FDRA) have long been pushing for zero or reduced import tariffs on footwear for the benefit of the US consumer. This plan could now be in grave doubt with a change in trade policy being introduced in the next Administration.
WWD has reported that a drastic change in trade policy could have negative effects on the fashion industry and the luxury European brands that depend on the US market could also suffer. We prefer to be cautious of making negative predictions at this point in time as those we have read seem inspired by the disappointment of Mrs Clinton’s defeat at the ballot box.
In a nutshell more jobs will mean more disposable income in the US and hence more demand for goods and services across the board. Now if that choice means protectionism and abandoning FTAs that would appear to be part of the campaign platform upon which Trump was elected.
