Trump takes power


Donald Trump has assumed the Presidency of the United States of America.

His inauguration speech was not a surprise. Whatever he has held dear all these days of campaigning for the most powerful position in the world, came out in a forceful manner.

Not everyone liked him or his speech. It was apparent from the resistance put up by thousands of protesters, not just at the venue of the inauguration, but also around the world.

I would say these things are pretty normal. Trump generated lots of negative vibes with what he talked about, and by what he did. There was hardly any positive reaction to what he said or did.

But then, he is the President of the U.S. now. He is going to do things which he said he will do and deliver to the American people. He has the executive power and also the strong pulling power of both the Senate and the House of Representatives, both dominated by his Republican Party.

What do you expect?

A free reign for the most conservative policies that the U.S. has ever experienced in a most rattling way. The world is about to experience an unpredictable U.S. Presidency and trigger-happy U.S. Policies which will reset relationships between nations around the world that have been taken for granted over the past century.

I am neither conservative nor liberal, but I can understand both sides of the coin.

My personal view is that Americans need to consume global goods and services, and that is possible only if they have jobs. American jobs cannot continue to be spirited away by other nations, or even by American companies which move the American jobs to low cost destinations. This is the fundamental premise of the Trump government policy mechanism. This aspect is going to be driven hard by Trump and his cohort of powerful nominees for the various cabinet posts. It is going to be challenging, but there is no easy way out for any other country to continue accessing the U.S. market without employing a large number of Americans in the U.S.

To this effect, if U.S. policies are tweaked by the new President, that should be fine – however, the caveat is for such changes not to start an expensive trade war. Unfortunately, the U.S. imports most of what its people consume, and so is dependent heavily on exporting countries such as China and Germany.

It will be miraculous if Trump carries his deal-making skills to diplomatic engagements and trade pacts such as NAFTA. It is unlikely that nations will enter into deal-making like buyer-seller types. I think that Trump needs to think very carefully about repercussions in case he decides to walk out of long-standing American-driven trade pacts around the world. Neither can he forget the special “alliances” that the U.S. has around the world. Israel is only one of them.

How Trump conducts his trade and foreign policies in the coming weeks will tell us a lot about his deal-making abilities and the capabilities of the people he has surrounded himself with.

On Russia, it will be counter-productive if Trump enters into a strategic talk with Vladimir Putin at the peril of Europe. The core European democratic institutions will be shaken – well, to their core. I doubt if the U.K. and Germany will remain steadfast allies of the U.S. if Trump ditches the NATO Alliance, and goes hand-in-hand with Putin. While it is not a bad idea to achieve global peace and at the same time reduce the number of nuclear weapons by working with Russia, it can only be done under consultation with Europe who share the continent with Russia. America is far away……..

So, there are some positives and lots of negatives. Small countries such as Singapore, Hong Kong, U.A.E., South Korea and Taiwan stand to lose out in case a trade war breaks out. Trump might delink trade from military alliances and cooperation. What happens then? A military ally may no longer be a close trading partner?

Good or bad, Trump has caused lots of people to wear their “hard” thinking hats who are contemplating the repercussions and results of his potential aggressive actions on various fronts. Countries, big and small, are rethinking their strategies with respect to the U.S. Corporations are redrafting their 2017-18 business plans. Banks are increasing their positions on USD. Individuals with exposure to the U.S. are hedging their bets. Students are wondering if the U.S. will still be a great place to go for under-graduate education when it is almost becoming certain that they will be sent back as there will be no more H1B visas available.

All of us have to prepare for a tumultous year ahead. So, let us celebrate the arrival of the New Year as much as we can, and then settle down for a rocky ride for the rest of the year. Have your own business plan with options ready as you navigate the newly treacherous waters.

Welcome to a new world and discover how to partner with an increasingly isolationist U.S. – don’t despair, it still can be accomplished – with your own new business plan !!!

Cheers,

Vijay Srinivasan

22nd January 2017

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