The USA election in 2016 has seen lots of changes in the global scenario. The election of Donald Trump will have major repercussions for years to come.
The perspectives of economics and business experts regarding the new chief of the White House are contradictory. A bunch of experts states that the “Trumponomics” can bring back the USA to the top of the world economy ranking. This statement is confirmed by the US steady economic growth (+ 3.2% annualised in the third quarter of 2016), which according to Morya Longo will lead to a “transfer of capital flow from Europe to the other side of the Atlantic that will benefit Wall Street rise”. On the other hand, Michael Hasenstab acknowledges that the event will bring the US in a period of uncertainty. He believes there are similarities with the Argentinian government under Kirchner that was under an excessive public interventionism such as trade protectionism, loose central bank policy, oppressive legislation government and unreasonable public spending. Therefore, Trump administration need to reconsider its strategies to prevent the agriculture and manufacturer industries (who would have wanted to help), by preserving the trade agreements and implement productive investments.
Warren Buffett and Paul Krugman believe that Trump will not lead the US towards recession as this event could even stimulate the economy in the short period. However, they think that the new presidency will have to confront many issues in the long run. For the former “the stock market will rise anyway in the next ten, twenty and thirty years, it would have been the same with Hillary Clinton and it will happen with Donald Trump”. However, Buffett had been among the most prominent supporters of Hillary Clinton’s campaign. In the CNN interview states that impose tariffs on imports from Mexico and China is definitely a “bad idea”. It is doubtful that Trump will be able to make it approved by the Congress, he added that, even if it will happen, it would not be enough to cause a recession. Buffett also believes that the main cause of the Tycoon’s victory is the growing disparity of incomes in US population.
While for the latter, the long-term effects of “The Donald” sovereign in the White House will be “tragic, perhaps catastrophic”. Paul Krugman thinks that the Trump protectionist policies will negatively influence the balance of trade. This effect will have a tremendous effect on employment. Moreover, further tax cuts and public spending promised by the president will drive up the national debt of 4.5 trillion over ten years. Krugman says that these negative effects will materialise in the long run. Trump policies will tend to benefit the wealthiest part of the population rather than helping American workers and the middle class who voted for him overwhelmingly.
During these days we have seen lots of controversial opinions regarding the “Tycoon President”, however, the reality displays that there is a lot still to come and ascertain.
Silvano Ghigliani
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