As of recent times, international populist insurrections have been gaining force--and in America, Donald Trump's election is but the latest installment. Today's populism consists of energetic, unruly pushes for change from the working class. This is accompanied by their demands for greater shares of the economic spoils of globalization. Yet Trump's "highly elastic positions" make it difficult for commentators to ascertain precisely how he will respond to their demands--especially given the highly problematic nature of the economic platforms he campaigned on.
The pervasive uncertainty of the aftermath of Trump's election is negatively impacting global markets. As many election broadcasters have mentioned, global financial markets do not like uncertainty--and the Wednesday of Trump's victory saw "stocks and stock-index futures outside the US sink...not necessarily because the economy's outlook is darker, but because there are so many more alternative scenarios now."
Uncertainty comes with both an upside and a downside. While Trump could exceed the generally low expectations of many Americans, he could also meet them. The Brexit example is optimistic: despite Britain's exit from the European Union, the national economy was largely undamaged. On the other hand, the reputation Trump earned for rogue behavior during his campaign strikes fear into the hearts of many Americans. Furthermore, Trump's extremely personalized rhetorical approach to politics is a "wild card for business and investors". It's another unknown as to whether Trump will "tone down such rhetoric because it's unpresidential, or dial it up because it's a potent use of presidential power".
Yet, dogged optimists could recast even Trump's unconventionality and inconsistencies in view. They may choose to view Trump's lack of an "ideological anchor" as a plus. Instead of the same old politics, Trump "makes deals," "negotiates" and will presumably build strong relationships with businesses.
On this past election day and the following day, US stock markets dropped noticeably, with "futures on the Dow Jones Industrial Average falling 506 points, or roughly 4%, as investors began to brace for Trump's agenda and his anti-free trade views". International fear of a Trump presidency was also apparent, upon the opening of European markets the next day. According to Forbes Online, in London stocks dropped 2%, while the Hang Seng Index in Hong Kong dropped 2.7%. The South Korean Kospi likewise fell 2.5% and the Japanese Nikkei 225 fell 5.1%--and Australian and New Zealand markets revealed similar numbers. Similarly, "assets that rise in value during periods of market upheaval" (such as gold) enjoyed a surge. The euro and the yen each fell by 2-3%. The Mexican peso also plunged over 13.07% after midnight, prior to the announcement of Trump's victory. (The peso has been the asset whose volatile progress has most closely reflected current events changes from Election 2016.)
Trump's proposed renegotiation of (or withdrawal from) the North American Free Trade agreement is one of the most controversial aspects of his presidency. Instituted in 1994, NAFTA allows goods to flow freely between the US, Canada, and Mexico. According to PRI, Trump intends to impose a 35% tariff on Mexican imports, and a 45% tariff on Chinese imports. He hopes that this spike in prices will force the typical American consumer to purchase domestically-made products instead of imported products. But Trump does not account for the very high likelihood that such measures will instead incite a damaging trade war with Mexico and China, in the form of reverse-tariffs on American exports to the two countries.
Adding onto Trump's proposed limitations on free trade is the alarming fact that Republicans hold majorities in the House of Representatives and the Senate. Furthermore, Trump will potentially have the opportunity to pack the Supreme Court during his first term in office. Should there be total compliance of all remaining branches of government, there will be no system of checks and balances remaining to hold the executive accountable. Analogous examples from history are also unpromising: Hoover's ill-advised tariff raises in the 1920's were motivated by a desire to side with American workers--but instead helped usher in the Great Depression. Economists ascertain that the same economic principles are at work in both examples.
Indeed, commentators from PRI have claimed that "Trump-o-nomics" will result in far greater economic tremors than those following Brexit. Even though Trump has a clear path to make good on his campaign promises, those promises defy what economists would deem to be in America's best interests. Economists agree that bleak economic realities will follow if Trump limits free trade with Mexico and Canada. America's national economy depends on "access to a global supply chain that produces parts used by innumerable industries, along with a great range of consumer goods." Because America is so intertwined in the complex web of global trade (in which Mexico and China are crucial players), commentators agree that disrupting America's relationship with either country will result in a threat of increasing costs for American households. Trade wars with both countries are highly likely if Trump follows through with his aims. Furthermore, Trump has not accounted for the chance that companies won't just shift their outsourcing from Mexico and China to Vietnam and India instead.
Another way that uncertainty manifests is in increased rates of catastrophism and nihilistic thinking. Many voters have thought--and may continue to think--that their situations are so terrible already, that things cannot possibly become worse. These thoughts inform their actions. Using Brexit as an example, it was found that the voters who opted to leave the EU are open about the fact that they did so to punish "those who beseeched them to vote to stay". British populists then (spitefully) reasoned that the economic fallout following Brexit would absorbed by the wealthy, in any case.
Commentators from the New York Times deem such thoughts as highly misleading. Rather, "a rupture of trade with Europe is likely to hit these industrial communities hardest," after Brexit--thus leaving politically mobilized, working-class occupants "angrier than ever". This is a self-fulfilling prophecy in reverse. Despite the fact that populists hold vehement beliefs, and act vigorously on them, they are setting themselves up for an unexpected, economic dead end end by electing those politicians who overtly cater to their social agendas.
Indeed, much of Trump's voting demographics came from those who typically vote Democrat, but felt suspicious of Hillary Clinton. Compared to Trump's relatively blank political record, Clinton's candidacy was marred by the media's attempt to create negative publicity through her husband's legacy in politics. Bill Clinton had helped institute the NAFTA, which resulted in many US jobs being lost to Mexico. Ever the opportunist, Trump then seized on the psychological leverage that this provided him.
As for the details of Trump's own agenda--he also claims to wish to spend big money on infrastructure, to create American jobs. In contrast, Obama's attempts at this were stalemated by the so-called Republican deficit hawks in Congress. At least Trump will have a common part affiliation, as he pushes for similar initiatives.
