FCIB, export credit, global credit reports, collections reports, country risk reports, international credit risk reports, global credit
My Account

The election of Donald J. Trump to the Presidency of the United States has caused tremors throughout the world, not only on our shores. Abroad, as in this country, pollsters had badly misjudged the odds that a businessman without any political background could defeat so consummate a beltway insider as Hillary Clinton. The orchestrated news media, determined to see the candidate of the Democrats chosen, did what they could to portray him as a “mean-spirited, Muslim-baiting” challenger (to quote the Financial Times of London) who, because of his convictions and temperament, is “unfit” to be President and cannot be trusted with the keys to the White House, let alone the nuclear codes.

In the US, we are now witnessing demonstrations, some of them violent, by Hillary supporters who insist Mr. Trump is “not their President” and even call for him to be assassinated. They are burning flags and evidently believe in this Country and in democracy only when things go their way. But abroad there has also been a crescendo of voices bemoaning Mr. Trump’s election and predicting a calamity. The President-Elect (so the Financial Times in a wildly misleading exaggeration) has said “he wants to muzzle the media, torture prisoners, lock out Muslims, expel millions of immigrants, build a wall against Mexico and cozy up to Russia’s Vladimir Putin.” Mr. Trump’s “America First” policies are an “American tragedy”, so one hears, and will “promote belligerent isolationism.”

Even Germany’s usually levelheaded Chancellor Angela Merkel found it necessary to spike her gratulatory message with a rather unusual and inappropriate lecture on democratic values,” writing that “Germany and America are bound by common values” and that these are “democracy, freedom as well as respect for the rule of law and the dignity of each and every person regardless of their origin, skin color, creed, gender, sexual orientation or political views.” Future cooperation, she added, would be “based on these values.” SPD leader and Deputy Chancellor Sigmar Gabriel accused Mr. Trump of being “the trailblazer of a new authoritarian and chauvinist international movement.”

This is just a taste of the hue and cry Mr. Trump’s election has raised among many outside this Country’s borders. “The dangers will now come thick and fast,” writes Philip Stephens in the Financial Times, as Mr. Trump will be “content to preside over the dissolution of the US alliance system, leaving Europe vulnerable to Mr. Putin’s revanchism and East Asia to the ambitions of an assertive China.” The well-known economics commentator Martin Wolf holds that the incoming American administration “might even reverse globalization, destabilize the financial system, weaken US public finances and threaten trust in the US dollar.” This is a heap of accusations on a man who has not even taken office yet. Ironically, it is somewhat reminiscent of the commentary that followed, albeit in less virulent form, on the heels of the election of the late Ronald Reagan, who at the time was described even by the Republican establishment in the US as an “extraordinarily dangerous” B-movie star.

What the talking heads seem to ignore is that the US system of government was not designed for a coddled political class whose members have very little real understanding for the problems of the average Joe and feel that they are entitled to leadership positions, people who regard being elected as practically their birthright. It was designed so that citizens of varied backgrounds can rise to the top, who strongly feel that they serve the people, not the other way around. Mr. Trump was elected only in part because of the policy ideas on which he based his campaign. In large part he owes his victory at the polls to the fact that voters saw him as an agent of change and rejected a third term for President Obama, which a win by Mrs. Clinton would have brought them. True, in absolute terms more voters cast their ballots for her than for him, but this does not mean that the “antis” reject all his ideas. And he clearly meant it when he said he intends to be the President for all Americans, not just his supporters.

Historically, the awesome responsibility of the office of the President has done more to form incumbents than incumbents have done to forge the office. I expect this to be true also with Mr. Trump and believe that he will pick an excellent Cabinet and surround himself with good and experienced people to implement policy and manage the day-to-day affairs. He is not dogmatic about policy positions but tends to regard them as targets from which to begin negotiations, and he is a pragmatic entrepreneur who generally understands economic incentives better than any head of state currently in the arena.

I expect his administration to bring radical change in many areas, but not to be reckless. Once he is sworn in he will hit the ground running and make impressive headway in his first 100 days in office. He will undoubtedly find plenty of things he likes in the pile of draft laws that in the past couple of years were passed by the Republican-controlled House, but then got bottled up in the Senate or died under Pres. Obama’s veto pen.

Internationally, Mr. Trump will not abandon NATO, but will try to return to it some of the sense of purpose it lost with the collapse of the Soviet Union. He will also insist that our partners overseas bear more of the financial burden they are obligated to shoulder, but which most have neglected in favor of social programs. President Trump will, furthermore, move quickly to raise America’s own credibility by rebuilding the depleted armed forces.

He has already reached out to some world leaders by placing calls to Benjamin Netanyahu, Abdel Fatah al-Sisi and King Salman of Saudi Arabia. He has assured the leaders of South Korea and Japan of a continued US commitment to their countries. As he put it in his victory speech, “I want to tell the world community that, while we will always put America’s interests first, we will deal fairly with everyone. We will seek common ground, not hostility; partnership, not conflict.” He is likely to abrogate the 2015 nuclear deal with Iran, but this was a grossly one-sided arrangement, anyway, and has been already breached in several ways by Teheran. It is not a treaty since it was not formally signed and was not ratified by the US Congress.

Regarding immigration control, I expect President Trump to begin by seeing to it that existing rules are enforced and that illegal aliens who commit crimes are locked up and/or deported. While immigration reform is being worked on, the vetting of new migrants will be intensified and where this is not possible, as in “terror-prone regions,” immigration is likely to be stopped. Mr. Trump will quickly strengthen controls along the border with Mexico against the ongoing influx of drugs and gang violence. In this, he is likely to have the support of Mexican President Enrique Pena Nieto. Dealing with law-abiding illegals who have been in this Country for some time will probably be left to a second stage of reform.

I said before in these pages that I disagree with the notion that globalization has been bad for the US, but when it comes to the 22-year old NAFTA accord Mr. Trump is now talking of renegotiating it, not assigning it to the dustbin. Some elements of this pact have already been essentially renegotiated under the Trans-Pacific Partnership and Mr. Trump is, after all, the author of the bestseller “The Art of the Deal.” He is certainly aware that Mexico is in a relatively weak negotiating position as it relies on the US market for 80% of its exports. But it also covers in the US six-tenths of its imports and 90% of the Fortune 500 companies have investments in Mexico, so I doubt strongly that Mr. Trump, a businessman, will risk unleashing a trade war with our Southern neighbor.

Potentially more problematic will be relations with China, since Mr. Trump’s declared intention to label the PRC a “currency manipulator” trying to maintain an undervalued exchange rate makes little sense at this time. Clearly, before and after joining the WTO Beijing kept the yuan artificially low to promote exports, but more recently it has been spending almost a trillion dollars to prop up the exchange rate, surely not the kind of “manipulation” Mr. Trump would want to discourage. What the US Government will push for is “fair trade,” and on this front, too, I believe that – given Mr. Trump’s negotiating ability and the threat of tariffs – ultimately deals will be struck.

Mr. Trump is determined to improve the investment climate in the US by lowering taxes and wiping much of the regulatory mess off the books that President Obama, in an executive over-reach, helped create with his “pen and phone.” I also expect him, early on, to develop incentives for US companies to repatriate much of the estimated USD 2.5 trillion in cash they now hold abroad and to initiate a vigorous infrastructure-building program. The US energy industry will benefit from his clearing the path for new pipelines, from a pulling back by the US from global climate change pacts, and from a lifting of the heavy damper that the Obama administration has sought to put on coal mining. Drilling on Federal land rich in oil and gas will be opened up.

I expect Obamacare, the no longer Affordable Care Act, to be repealed without all of its beneficial effects being undone. It is likely to be replaced by a new set of laws relying much more heavily on the free market and on competition. I would not be surprised to see Mr. Trump push for the adoption of the plan of House Speaker Paul Ryan, which is designed to give patients choices rather than government-imposed obligations.

In sum, at the core of Mr. Trump’s promises have been the creation of a more business-friendly environment, the stimulation of economic growth, tax reform, a lightening off the environmental thicket, help for the troubled inner cities, and an emphasis on fair international trade relations. Since the elections yielded the Republicans a clean sweep of both Houses of Congress and they now control 34 state Governorships and 36 state legislatures, Mr. Trump will be in an exceptionally strong position as he begins his term in office. I suspect that he will use it well and plans to get much accomplished in his first 100 days, moving swiftly, albeit with much more circumspection than the hand-wringing Fourth Estate, here as well as abroad, would have one believe.