The detailed reasons Hillary Clinton missed what should have been a slam dunk, allowing Donald Trump to capture the White House, will be picked over by pundits for months to come. Right now they hardly matter.
Whatever the exact explanation, Trump succeeded in tapping into a current of popular feeling in America’s swing states, while Clinton failed to mobilise sufficient support where she most needed it. The result is that Americans now have as their president-elect an uncouth reality television celebrity of dubious morals and questionable business ethics, whose companies have filed for bankruptcy six times and been involved in more than 4,000 lawsuits, and whose campaign policy pronouncements, when not completely incoherent, were often vague and contradictory.
In these circumstances, it is hard to chart with any precision what a Trump presidency will mean for the United States, let alone for the rest of the world. However, on some matters of economic and foreign policy, Trump and his advisors have been reasonably consistent, although they have offered little detail. In these areas at least, it is possible to draw up a sketch map of the directions that a Trump administration might take over the next four years.
Most obviously, the success of the Republican party in taking control of both houses of Congress as well as the White House will enable the administration to embark on much-needed tax reforms, which for years have been blocked by Washington’s legislative gridlock. Trump has promised to simplify the insanely complicated US tax code, which he may yet succeed in doing. But in reality tax reform is shorthand for tax cuts, with Trump proposing to lower personal taxes, slash the US corporate tax rate from 35 per cent to just 15 per cent, and offer tax breaks to encourage US corporations to repatriate some US$2.5 trillion in cash held abroad.
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Even if Trump’s promise to ramp up spending on public infrastructure projects is not implemented in full – by one estimate it would drive the US government’s gross debt up from 104 per cent of gross domestic product to 140 per cent – his fiscal programme is likely to prove massively stimulative, pushing up both US economic growth and inflation.
Normally faster US growth would be good news for Asian economies, generating stronger demand for the region’s exports. But this time around Asia is not counting on an export boom. Although one of Trump’s central campaign promises was his undertaking to cut government red tape, in order to fulfil his pledge to boost income for his core constituency of blue-collar workers he faces having to tighten US labour market regulations, quite possibly by aggressively raising minimum wages.
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As things stand today, that would merely encourage US companies to move even more operations offshore, very likely to Asia, which would threaten to leave American workers worse, rather than better, off. To prevent this happening, Trump is proposing to throw sand in the wheels of international trade, withdrawing from the World Trade Organisation, tearing up multilateral trade pacts that have not yet been ratified, such as the Trans-Pacific Partnership, renegotiating deals that have, like the North American Free Trade Agreement, and imposing punitive tariffs – 45 per cent in the case of China – on imports from key trading partners.
In short, Trump is threatening to ignite a world trade war. Under the powers delegated to the president by Congress, he will have the legal authority to do it. But whether he will actually go ahead is far more doubtful. Without exception, mainstream economists warn that such a conflict would inflict grievous damage on the US economy.
For example, slapping punitive tariffs on imports from China would simply push up the prices of the consumer goods purchased by Trump voters, eroding their real incomes. Worse, China would immediately turn around and impose countervailing tariffs on US exports in a move that would hammer US corporations. The net result would be higher US prices and weaker US consumption and investment, a combination that by one estimate could cost as many as five million US jobs.
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Seen in that light, although Trump looks set to tear up the TPP, it appears highly unlikely that he will ever follow through on his more extreme trade threats, such as his proposed tariff on Chinese imports. Instead they look more like the initial bargaining position of someone who regards himself as an expert negotiator and consummate dealmaker. That may be giving Trump rather too much of the benefit of the doubt, but there is little question that a tough negotiating stance could achieve a much better deal for US companies in China by opening up protected sectors of the Chinese economy and lowering barriers to inward investment.
It is even possible that Beijing could react positively to such a transactional approach to bilateral relations. Trump has already signalled he has little time for grand strategies like the TPP and Barack Obama’s “pivot to Asia” – which China’s leaders saw as an attempt to contain their legitimate ambitions as a major regional power. Instead the president-elect appears ready to strike opportunistic deals that promise an identifiable near term pay-off with countries like China and Russia that previous administrations regarded as antagonists rather than business partners.
That would suit China, leaving Beijing to pursue its own brand of chequebook diplomacy around Asia, while the US remains engaged with the region, but on a more transactional, less paternalistic basis. That, of course, would be a major shift in the tectonic plates of Asia’s strategic relations, but the long term result could be less international friction, and more stability. Applied elsewhere in the world, such an approach to international relations could prove positive for the US as well, by ending American military overstretch.
Of course, Trump’s political opponents will condemn what they see as the loss of US influence around the world. But in the longer run, it is hard to believe any one else will regret it if Trump jettisons the interventionist stance of his predecessors – first George Bush in Iraq, then Obama in Libya and Syria – who appeared to believe they could make the world a better place by bombing it. For all Trump’s many failings, his professed distaste for international interventionism may yet prove to be no bad thing. ■
Tom Holland is a former SCMP staffer who has been writing about Asian affairs for more than 20 years