Initial Global Effects of Trump Even Before Taking Office

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Even before taking office, President-Elect Donald Trump and the policies he promised during his campaign are already having a worldwide impact in at least three areas — global finance, trade and climate change.

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If his election is described as an earthquake, the aftershocks are now being felt.

Global funds are starting to move out of many developing countries, reducing the value of their currencies and causing great economic uncertainty.

The Trans Pacific Partnership (TPP) looks like it will fade away, as Trump has said he would give notice of the US withdrawing from the pact on his first day of office.

Earlier, President Obama, seeing the signs on the wall, gave up on efforts to give it a final push through Congress.

And delegates meeting at the two-week annual UN climate conference that ended in Marakesh on 19 November were all speculating whether a President Trump would carry out his campaign threat to pull the US out of the Paris Agreement and what then would happen to future international climate action.

Trump has since softened his stand, telling the New York Times on 22 November that he has “an open mind” on the Paris agreement. But he has also indicated he won’t follow through on the Obama administration’s domestic measures to reduce Greenhouse gases.

These are only some of initial effects in anticipation of a Trump presidency. As the President Elect begins to fill in his cabinet positions, the world also wondered what is in store with regard to new US policies on immigration, the UN, the Middle East, Asia and even NATO.

The first concrete real-world effect was on currencies and the flow of funds in developing countries. Equities and currencies in many countries in Asia and elsewhere have taken a hit since the Trump election victory.

The US dollar has strengthened significantly in expectations that Trump will embark on massive spending on infrastructure, thus increasing expectations of inflationary pressures and of the Federal Reserve raising interest rates earlier than expected.

Many billions of dollars of funds that had moved to emerging economies in search for higher yield are returning to the now-attractive USA, and this reverse flow is expected to continue or increase.

This can cause volatility and havoc in many emerging economies, in the wake of an exit of a sizable portion of the hundreds of billions of dollars of foreign funds.

Many developing countries are vulnerable as foreign funds in recent years have increased their ownership of their government bonds denominated in domestic currencies, and there is also higher participation of foreigners in their stock markets. (IPS)