Under some scenarios, yes. I think we should wait and see whether the tweeting and positioning during the campaign are more rhetoric than reality – but clearly there are some scenarios where he could be bad for the global economy.
His election obviously highlights a deep-seated angst which is evident across the globe, especially in Europe. His victory is part of an increase in populism and a breakdown in the globalisation process more broadly. We will get a better view of it with the elections in some European countries next year. But Trump’s election certainly does raise the threat that something deeper is going on here that will derail globalisation, which would be a threat to the global economy.
"Trump’s election certainly does raise the threat that something deeper is going on here that will derail globalisation, which would be a threat to the global economy."
If, say, the Treasury Department labels China a currency manipulator, and then follows through with tariff increases – probably not across the board, but selected tariff increases – on Chinese imports to the US, then that’s the basis for a pretty dark scenario. I think the Chinese would respond to that, causing a breakdown in our relationship, politically and economically, and that’s bad for our economy, their economy and the global economy.
I think if he focuses on corporate tax reform, infrastructure spending and deregulation, he would go a long way towards soothing concerns that many in the economic policy have about him. If he follows through on his talk of tariffs, if he limits immigration, if he makes it difficult for undocumented workers to stay and work here in the US, if he continues on this path of browbeating American companies he’s not happy with, that would be viewed very negatively.
"It’s not just what happens next month or next quarter, but over a generation or two. And it’s not just what happens to the United States of America, but the globe."
The President of the United States has significant power to make an impact, clearly on the US economy, but also on the global economy. He or she matters a lot – and Trump matters especially, because Congress is Republican, and the filibuster in the Senate is no longer the fetter it used to be. With trade and immigration policies especially, he has a lot of power through executive order. Even if he does something people don’t like, it could take years to figure it out, and by the time a decision is rendered by the court system, it’s irrelevant.
He has a lot of power and authority and influence, and he can change the direction of things quite significantly. Whether he understands that, I don’t know: we’ll have to wait and see. He has to step out of his business mindset, and look at things from a more global perspective. There’s a difference between a transaction and a strategy. It’s not just what happens next month or next quarter, but over a generation or two. And it’s not just what happens to the United States of America, but the globe. At the end of the day, the success of the American people is tied at the hip with the success of the rest of the global economy.