Trump tri­umph shocks open-trade com­pa­nies

It seems com­men­ta­tors mis­read the mood of the coun­try, says vet­eran US aero­space con­sul­tant MD Jer­rold Lundquist

The Star (Kenya) - - News Business - REUTERS/

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.

/REUTERS

A screen shows US Pres­i­dent-elect Don­ald Trump as traders mon­i­tor stock in­for­ma­tion at Dubai Fi­nan­cial Mar­ket, in Dubai, United Arab Emi­rates, yes­ter­day

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