But will that uncertainty mutate into a crisis or something else, even opportunity?
"Will [Trump] uncertainty mutate into a crisis or something else, even opportunity?"
Tony Walker, Author & former editor
For the global economy – and particularly the Asian region – the crucial question is: will fear of a Trump administration undo much of the careful work gone into building a globalised trading environment? A trading world which has lifted billions out of poverty?
Central to equation is China. If the President Elect’s threats materialise to declare China a currency manipulator at his first opportunity - and thus its exports subject to punitive tariffs - a trade war not in anybody’s interest would most likely be the result.
If common-sense prevails and Trump dials back on some of his more outlandish threats there are reasonable prospects of a world, shifted on its axis, settling back into some sort of equilibrium.
On the other hand, it would be foolish to pretend all will be business as usual.
Political scientist Francis Fukuyama declared the end of history and the triumph of the liberal democratic experiment when the Berlin Wall came down in 1989.
For all sorts of reasons - not least the unanticipated rapid rise of China - the observation proved to be premature.
Now, the world is grappling with a new threat to the comfortable assumptions which have underpinned an unprecedented period of global expansion (briefly interrupted by the global financial crisis of 2008).
Trumpism with its isolationist, protectionist, nativist impulses echoed elsewhere – Brexit is but one manifestation of a global tendency – represents an existential threat to comfortable beliefs market reforms and a removal of trade barriers will contribute to a virtuous circle of global economic growth and well-being.
The president-elect’s notice he will discontinue American efforts to put in place a sweeping trade agreement for the Asia-Pacific – the Trans Pacific Partnership – is disappointing on several different fronts, including the expression such a trading pact would have given to President Barack Obama’s pivot to the region.
China, not part of the TPP negotiations, will see opportunity in an American withdrawal from such a trading bloc.
Trump campaigned on a platform – if his jagged prescriptions could be described as such – antagonistic to open markets, open borders and a globalising world in which responsibilities would be shared in the interests of a liberalising rules-based international order.
His pledge to “make American great again’’ by bringing manufacturing jobs home, asserting American military power and eschewing responsibility for a collective endeavor to limit global warming might turn out to be an empty slogan.
But in the process, if restoring American greatness - whatever that might mean - proves to be a two-edged sword, much damage and dysfunction would result as the country embarks on a course at odds with its previous role of global hegemon and stabiliser.
In a world more fractured - indeed arguably more querulous than at any time since the end of World War II - more than ever American leadership is needed to avoid an unravelling which would play into the hands of states antagonistic to a US global leadership role.
A further fracturing of a global consensus would be highly dangerous in an environment in which China is continuing to assert itself and rubbing up against its neighbors in the process.
Russia’s Vladimir Putin is seeking to divert attention from an economic crisis at home by adventurist activities abroad, while the European experiment finds itself under extreme pressure from nationalistic forces from within (epitomised by Marine Le Pen, leader of France’s National Front).
In the Middle East, Iran’s power and influence is spreading via its surrogates in Iraq and Syria, thus adding to pressure on America’s allies in the Gulf.
There’s ongoing fears of the collapse of a global consensus on the need to curb the spread of nuclear weapons, as well as legitimate concerns about a global economy awash with debt at a time when central banks are struggling to balance the need to stimulate sluggish economies with fears of easy money contributing to the bursting of asset price bubbles and knock-on effects on the banks.
All of this would seem to place even greater premium on American global leadership at the very moment when legitimate concerns are held about a Trump presidency living up to America’s traditional obligations, or at least appearing lukewarm about its responsibilities.
In the event of a global leadership vacuum bad actors - state and non-state - will not be slow to take advantage of opportunities. Much will depend on the shape of a Trump administration, the sort of cabinet appointments the president-elect surrounds himself with and relations with Congress.
Relationships with the Republican Congressional leadership may prove rocky, especially on the issue of fiscal restraint. Trump’s proposals to dramatically lower taxes and spend big on infrastructure will add trillions to the budget deficit ($US6 trillion over 10 years, according to one estimate).
If Donald Trump follows the example of a Republican predecessor of the nineteenth century in the person of Abraham Lincoln and appoints a ‘team of rivals’ of significant quality to his cabinet unafraid to provide fearless advice we may avoid an administration running off at tangents.
But if he feels an overwhelming need to reward many of those of dubious credentials who clustered around his insurgent and improbable candidacy then the quality of decision-making will inevitably suffer and fewer curbs will be placed on Trump’s own impulsiveness repeatedly on display during the campaign itself.
His surrogates have begun to compare the president-elect with Ronald Reagan whose qualities were derided by a Washington establishment as inadequate for leadership of the free world.
But Reagan surprised even his most committed supporters by proving to be one of America’s better presidents, one who faced down the former Soviet Union, was instrumental in the eventual removal of the Berlin Wall, and presided over a period of relative economic well-being at home. And he did raise taxes in his second term.
But there is a striking difference between a Reagan and a Trump. Reagan had held elected office as governor of American’s most populous state. Perhaps more importantly he possessed an even temperament, critical to someone in a position to shift the world on its axis at any given moment.
Whatever else might be said about Trump the phrase ‘even temperament’’ does not immediately come to mind.
From an Australian perspective, leaving aside America’s role as a cornerstone ally under treaty arrangements, most critical will be a Trump administration’s focus on the Asia-Pacific, and China in particular.
Australia’s friends and allies in the region, including Japan and the countries of the Association of South East Asian Nations (ASEAN), have a very significant investment in a continuance of America’s security commitments in the region, and a sound working relationship between Washington and Beijing.
In the aftermath of the US election there is hardly a more important component of American foreign policy than time and effort devoted to getting the settings right in relations between the world’s largest economy and a rising power.
As a businessman committed to the ‘art of the deal’, Trump, more than most should understand it would be very bad for business for a rupture to occur in relations between the US and China, whatever might’ve been said on the campaign trail.
Trump presumably would not want Chinese airlines to stop buying Boeing aircraft.
As the pragmatic Chinese themselves might say, out of a threatened crisis comes opportunity.
Tony Walker is an author and former Washington correspondent, international editor, Middle East editor and senior political editor at The Australian Financial Review and the Financial Times
The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.
09 Nov 2016
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