Tuesday, 3 May 2016

Six months of Donald Trump as the US President: What will happen?

If at all, Donald Trump does become the next US President, it is going to send shockwaves throughout the world. The Economist Intelligence Unit has listed Trump presidency as one of the top 10 global risks and such concerns are not unfounded. As much as we have seen and liked Trump – the astute businessman and the stern interviewer, we are yet to see his political persona; the few glimpses that we see these days don’t look very promising.

Trump has a rich business experience, probably more than any previous presidents. And his supporters expect him to resurrect US economy just the way he has built the Trump Empire. One of the main talking points of his proposals – the immigration reforms, where he talks about deporting about 11 million undocumented immigrants and building a wall between Mexico and US - let’s assume he implements this first up. This will significantly reduce cheap labour and affect agriculture and allied industries badly, leading to sharp rise in food prices. According to American Action Forum, this would cost the federal government about $400 billion and reduce the GDP by $1.6 trillion; stabilising this would take 20 years.

Trump’s tax plan has garnered a lot of praise from businesses, hedge funds and individuals. But a closer look reveals an enormous tax revenue loss. Such an act would lead to more business investment, more jobs, faster GDP growth and a bigger economy but also dramatically amplify the budget deficit and the spiralling US debt. And markets are not going to react too kindly to that. Investors would be spooked and would start demanding higher interest rates on US treasury bonds.

But all these points aside, what happens to the various bilateral relations of the US? Trump has already made some scathing remarks against China, and China wouldn’t like to forget it easily. Though he looks pro-India, and traditionally Republicans are so, India won’t really feel assured of his intentions. His statement of tearing up the Iran treaty has already sent jitters in international circles, and ‘backing Putin 100% over Syria’ might not go down too well with US’ traditional allies. The first 6 months would be a testing time for all the foreign diplomats and embassies.

All this will only happen when Trump is allowed to implement all that he has preached. We have seen it umpteen times what is promised before elections is often not what actually happens after that. Trump does not have many allies in the Congress and his ideas might never get the final approval to become laws. He probably might realize soon enough that running the nation as its president is not quite like running a company as a CEO. But till then, the entire world will be on tenterhooks, not knowing what next Donald Trump would have up on his sleeves. His intentions might be to make US the strongest economy but it might end up sowing the seeds of an uncertain and unstable global future.


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