Trump triumph shocks open-trade companies
It seems commentators misread the mood of the country, says veteran US aerospace consultant MD Jerrold Lundquist
Donald Trump’s victory in the US election sent shockwaves through industries that rely on open trade – from airlines to cars and IT outsourcing – even though many executives remain unsure what his protectionist rhetoric will mean in practice.
Throughout his presidential campaign, Trump has vowed to revive the US economy by slashing taxes, preventing companies from making products overseas, renegotiating trade accords and imposing tariffs on imports from countries like China.
“People are in shock. It seems commentators misread the mood of the country,” said veteran US aerospace consultant Jerrold Lundquist, managing director of The Lundquist Group.
In Asia, shares in airlines with significant exposure to global trade, such as cargo giant Korean Airlines, fell as much as five per cent as Trump closed in on the White House. Air China’s Hong Kong-listed shares tumbled to their lowest level since June, and automakers like Toyota for whom the United States is a top market, fell 6.5 per cent.
“This is part of a much broader problem that we’ve seen in the world, in which countries are turning inwards and reacting against globalisation and open borders,” said aerospace analyst Richard Aboulafia, vice president of Virginia-based Teal Group.
International trips make up 64 per cent of global air traffic, according to IATA.
“We have seen a large section of the population that has not benefited in the past decade, and we are seeing support for populist politicians with simple answers,” Brian Pearce, chief economist of the International Air Transport Association told Reuters ahead of the election.
After a bitter election campaign, trade experts said it remained unclear how Trump’s statements in favour of protectionist trade measures and tough immigration controls would translate into policy.
“The honest answer is that no one knows; even Trump himself doesn’t know,” said Bertrand Grabowski, a managing director at Germany’s DVB Bank which specialises in financing trade. “He campaigned not on ideas but on anger and frustration.”
Executives at US auto companies said they are concerned about Trump’s stance on free trade, especially his tough talk on the North American Free Trade Agreement. They all have production sites in Mexico.
A screen shows US President-elect Donald Trump as traders monitor stock information at Dubai Financial Market, in Dubai, United Arab Emirates, yesterday