Factor in Trump’s risk premium
With a Donald Trump and Joe Biden rematch increasingly on the cards, the world has to seriously factor in what a potential Trump presidency will mean for global trade and geopolitics. Trump has so far overrun his challengers for the Republican nomination to contest for the White House. His possible presidency comes at a time when many parts of the world are reckoning with war and violence.
The world is in upheaval, with the Kremlin’s offensive on Ukraine unrelenting and tens of thousands of lives being lost in the war between Hamas and Israel. On both fronts, the US is a key player and whoever occupies the White House sets the country’s foreign policy. The Biden administration has backed Ukraine to the hilt in its counteroffensive against Vladimir Putin’s marauding soldiers. Some extremists in the Republican Party close to Trump have expressed displeasure at the billions of taxpayers’ dollars channelled to Kyiv to defend its territory.
Trump has not been shy to show his admiration for Putin and his strongman posture. His possible presidency cannot be discounted based on what polls from the US are suggesting. Ukraine’s president, Volodymyr Zelensky, who has won admiration for his steadfastness against a well-resourced Russian army, should be a worried man about a possible Trump presidency. As it is, he is contending with Republican hardliners who are already holding up about $60bn in aid to Ukraine, asked for by Biden.
Trump’s four-year stay as the US president gave a full picture of his foreign policy. Under his leadership, the Americans used every economic and military tool at their disposal to exert the US’s influence and bend “hostile nations” to its impulses.
Iran learnt a bitter lesson when Trump unilaterally pulled out of an agreement stitched by his predecessor, Barack Obama, to mend fences with Iran an attempt by the Middle East country to abandon its pursuit of nuclear weapons. In this and other instances, the sanctions by the US sting primarily because of the primacy of its currency. Many nations, both its friends and foes, hold their reserves in the dollar. In this instance, the greenback and its hegemony become a potent reprisal to any nation Washington deems rogue under Trump.
It is still a long way to November, when the US goes to the polls to anoint its next president and a lot can happen before then. If the war in Gaza is still raging and Trump emerges on the winning side, the Palestinians would have serious concerns as Trump has been a staunch supporter of Israel’s course.
China, which Trump regards as the US’s economic and military foe, will also be keeping a close eye on the polls. World trade was hurt by the trade war between the world’s two largest economies under the Trump presidency. A Trump presidency would also test the mettle of the “Global South”, which with China and Russia as its de facto leaders have been flexing their muscles in global politics, particularly under the banner of Brics.
It would be folly to dismiss Trump’s chances of wresting back power from Biden. SA and its allies might must consider what his presidency would mean for geopolitics and world trade.