Donald Trump’s unprecedented win in the U.S. elections has raised may questions about what the future will look like. At the forefront of the conversation is the proposed economic policies of America’s trade deals.
Trump’s proposal’s to default on trade deals with the United Sates’ biggest trading partner, Mexico, has dropped the peso as much as 13%. During his campaign, the electorate promised to tariff money sent to Mexico by migrants. His triumph unsurprisingly sent the peso to 20 year lows.
America’s trade with China may also take a hit as Trump vowed to tax Chinese imports at 45%. Additionally, the future US president promised to declare Beijing a currency manipulator. Trade wars and increases in imports could send the global economy into recession.
However, Trump’s victory speech was trade-friendly, largely contradictory to his campaign’s rhetoric. The electorate spoke of working together and plans to ‘‘bind the wounds of division’’. This change in disposition rallied markets, sending Asian stocks surging after a major knee-jerk reaction sell-off in the hours after the presidential winner was revealed.
The future of global trade has a huge question mark over it. Investors should remain cautious as volatility in the market is likely. 2016 has brought many new changes to the fundamentals of our nation’s relationships. Ergo, uncertainty will dominate markets until a strong rapport is ratified.