Trump wins: What next for the world and us?

To the astonishment of the civilized world — which for this article I define as those avidly following the US presidential election and who profess to be righteous, decent, freedom-loving people — the much reviled villain of the 6 January attempted coup d’etat, Donald J. Trump has emerged like a phoenix from the ashes of the raucous quadrennial American exercise of choosing the leader of the most powerful country in the world.

Theories abound as to what happened. My own speculation that Trump would win, which looking back now, admittedly, I mistakenly attributed mainly to his macho reaction to the assassination attempt, cannot explain the apparent sweep of both the US Senate and the House of Representatives which undoubtedly suggests the extreme displeasure of the nation with the status quo.

Clearly, the American people have resoundingly declared that enough is enough insofar as the unprecedented rise in the cost of living, the burgeoning horrendous crimes committed by illegal immigrants, the geo-political turmoils around the world dangerously simmering to a boiling point as if ready to explode are concerned.

And rightly or wrongly, they attributed this state of affairs to the incumbent Democratic administration personified, perhaps unfairly, by Kamala Harris. This was a definitive statement that change, any kind of change, was desperately needed. And indeed, change is surely coming.

My own take on what happens next: The financial markets have already reacted. The US stock market is going like gangbusters anticipating a sympathetic administration that will pave the way for a much more favorable income tax regime for Big Business and which will put up a formidable tariff barrier to competition from a persistent, troublesome, formidable foe, the Middle Kingdom, i.e., China.

Trump has repeatedly said he will impose a universal 10-percent tariff on all imports and a humongous 60-percent tax particularly on products from China. And it doesn’t take rocket science to expect that US-made goods will be cheaper than any imported product.

For US-based manufacturers, this will translate of course to a significant competitive advantage, a free pass, so to speak. This nirvana, however, would likely be short-lived as this edge will gradually be eroded by more expensive imported inputs and supply chain disruptions for US-based manufacturers that will trigger a new wave of inflationary pressures eventually depressing market demand and squeezing profit margins as interest rates will again have to be raised by the Fed to control prices.

With such a scenario, global trade and growth will definitely be dampened as China will surely retaliate with its own tariff and non-tariff measures affecting both developed and developing countries alike doing significant trade with the Middle Kingdom such as the Philippines.

And that’s bad news for the Philippines on several fronts. With high interest rates in the US, we will have to keep pace and maintain, if not bring up, our interest rates as well, causing grief to borrowers both corporates and individuals. Failure to adjust rates upward will surely lead to a weak peso easily breaching P60 to a dollar. Importations will then be more expensive. Domestic oil prices will increase. Consumer prices will follow suit. Our stock market will continue to be in a state of slumber. Local businesses will slow down, holding back on new investments.

Government revenues will drop necessitating higher borrowings. To exacerbate matters for us, with Trump’s avowed intention to onshore any and all activities that have been offshored by US firms, our BPO industry will definitely feel the crunch potentially dislocating hundreds of thousands of workers.

And perhaps the ultimate black swan for us is, with an isolationist “America First” Trump regime in place for at least the next four years, the Trump administration will likely scale down support for any external geo-political conflicts. China could very well escalate its West Philippines Sea aggression, rendering us defenseless with no strong US military support forthcoming.

This rethink of how to move forward goes as well for Ukraine which is dependent on the US for its armaments, and Israel that might be more malleable under Trump to ease up on Hamas and its allies.

All in all, the world awaits with bated breath whether Trump’s pre-election histrionics will indeed come to fruition. And if so, what next for the world?

Until next week… OBF!

For comments, email bing_matoto@yahoo.com.