What a “President Trump” will mean for the Caribbean

29 August 2016


What a “President Trump” will mean for the Caribbean

 

 

Why the US Presidential election matters to Trinidad and Tobago and the Caribbean

Without wishing to overstate the obvious, the US Presidential election is of great significance to Trinidad and Tobago (and by extension the rest of the Caribbean) because the United States – despite significant Chinese effort to gain influence in the region – remains the dominant power house in the Caribbean – as well as the rest of the world.

Beyond this simple truth, the United States is consistently Trinidad and Tobago’s largest trading partner, Trinidad and Tobago has a currency that is effectively pegged to the US dollar, and the United States provides a home to an estimated 200,000 ex-pat Trinidadians, many of whom reside in the United States as illegal or undocumented immigrants, and provide a financial lifeline to family members remaining in Trinidad.

For our trading partners within Caricom whose economies depend upon tourism, the United States remains the major source market for overnight and extended stay visitors.

The death of rationalisation and reason, and the rise of the Angry Man

One of the legacies or “spin-offs” of the 2007 economic collapse and the resulting advent of austerity based economic policies in territories like the United States and Europe (especially the United Kingdom – witness the campaign in respect of Brexit) to deal with the effects of economic collapse, has been the rise of “Low Substance – Anti Factual” politics.

What this means is that increasingly politicians offer policies that have little substance, are often factually incorrect, or based on a premise that is fundamentally flawed. These weaknesses don’t make the policies unattractive. To those who are suffering financially, and to those who are looking for someone to blame for their plight, these “Low Substance – Anti Factual” policies provide a vent for their anger and frustration.

Arguably, and depending on which side of the political fence you sit on, Donald Trump is a proponent of “Low Substance – Anti Factual Politics.”

Recognising that there are a lot of angry disenchanted voters in the United States is the first step to understanding this phenomenon. The success of the Trump campaign has primarily been based upon a coalition that has been able to translate voter anger over economic globalisation and the loss of US jobs overseas, anger over the alleged impact of immigration, anger over terrorist attacks, and anger over the “establishment” the members of which to many voters sit happy and unaffected by austerity policies.

Can “Low Substance – Anti Factual” Politics win Trump the White House?

The same factors that propelled Trump to the Republican nomination effectively fuelled the Brexit Campaign that may or may not eventually take the United Kingdom out of the European Union.

If it worked once – demographic factors aside – in theory it could work again.

We will have to wait and see.

What will a “President Trump” mean for the Caribbean?

The problem with “Low Substance – Anti Factual” politics is that it allows candidates to make statements and assertions as to what they would or wouldn’t do as President without providing any substantive explanation as to how those statements or assertion will be delivered in practice.

This aside, there are common threads that run through Trump’s political statements and speeches that allow a picture to emerge as to what US foreign, trade, investment, aid, climate, and security policy will look like under a “President Trump”.

The picture is contrasting to that that would arise under “President Clinton” who we can reasonably expect to continue to follow the policies of President Obama’s administration if elected.

Foreign Policy – a return to isolationism?

Unlike the 43rd President of the United States, George W. Bush who saw the value of trying to change other countries systems of government by intervening in those countries (the invasion of Iraq being the prime example), Donald Trump sees little value in expending effort and resources of the US military in trying to change other countries systems. This in itself doesn’t necessarily mean a return to isolationism, but it is definitely a step in that direction.

Read any of Trumps books – or for that matter listen to his promises to “make America great again” and you will see that Trump is above everything an aggressive negotiator who believes that in life there can be only one winner. Everyone else who comes second cannot be a winner too. In other words, coming second equates to losing and Trump – and by extension the US – will never lose under a Trump Presidency.

To this end, Trump like all Republicans before him, believes in the maintenance of a mighty military force. Beyond this he clearly believes that the US must always remain the strongest country at least based on military strength. Effectively under a Trump Presidency, no other country can ever be in a position to “out-bully” the US.

However, if other countries expect to benefit from the security that this US military might provides to others -such as the NATO alliance or Saudi Arabia – then those countries and organisations must now contribute significantly towards the cost of maintaining that force. Under a Trump Presidency those countries will have to pay their fair share moving forward if they expect to receive the continued protection of the US military.

Foreign Trade – there are only winners and losers?

Underscoring the tone of Trump’s Presidential campaign is the philosophy that fair trade equates to trade that favours the US and not necessarily others. A central tenet of the “Low Substance- Anti Factual” political approach is the view that the US is getting a raw deal from free trade. To this end Trump has adopted a protectionist anti-trade stance that is much stronger and focused than we have ever seen from a Republican candidate before. If elected there is a strong likelihood that Trump will tear up the Trans-Pacific Partnership Agreement, ignore the North American Free Trade Area and the Caribbean Basin Initiative on the basis that they simply don’t benefit the US.

Foreign Investment – bringing the jobs back home?

Feeding the appetite of the “Angry Man” is vital to the success of “Low Substance – Anti Factual” politics.

While both Republican and Democrats have highlighted with concern growing trade deficits with China (Trump has equated this growing deficit with the criminal act of Rape) and Mexico in particular, the continued off-shoring of US company operations to overseas territories (including the Caribbean) with lower costs of production and lower labour costs, and the resulting loss of US manufacturing jobs, has been hard for the “Angry Man” to stomach.

Tapping into this anger, Trump has promised to levy tax penalties on US manufacturers who have offshored all or part of their manufacturing operations offshore. Such a policy is likely to make future investment in the Caribbean by US manufacturers much less likely.

Foreign Aid- God bless America and nobody else?

Trump’s position on foreign aid is perhaps less clear than other policy areas because all candidates steer clear of discussing it on the basis that it is unpopular to many people in the electorate. However, on a Trump “win-win” scenario we should perhaps expect a significant reduction in aid from a Trump Presidency. If there can only be one winner then “God Bless America, and Nobody Else”?

Climate Change – there is no such thing?

The issue of climate change is of crucial importance to the Caribbean as a region because the Caribbean bears the brunt of the effects of global warming in terms of rising ocean levels, temperatures and increased hurricane activity.

While President Obama has made some attempt at tackling the issue of climate change (many of those initiatives began while Hillary Clinton was acting as Secretary of State), a Trump Presidency would very likely ignore the dangers of climate change because Trump has stated on numerous occasions that he does not believe such a thing exists.

In more ways than one a Trump victory would likely lead to a much warmer Caribbean.

Security – an end to the illegals?

Immigration is a key issue for Trump supporters and for the Trump campaign (or at least the “Angry Man” portion of it). The policy of President Trump is clear. If elected, he promises that he will send all the illegals home with very little exception.

This policy approach – should it ever get off the ground – would have serious implications for the islands of the Caribbean and Trinidad and Tobago.

According to data released by the Hillary Clinton campaign, Caribbean Immigrants make-up approximately 3.2% of the illegal immigrants in the US.

Many of those “illegals” support families back home in the Caribbean by sending sums of money back to the remaining family members in the Caribbean on a regular basis. For many of those families who are close to the poverty line and “scrunting”, this flow of funds is vital to ensuring that there is food on the table and a roof remains over their heads.

Deporting illegals will remove this lifeline, and in addition will very likely have a negative impact on the crime rate in the Caribbean as those deported struggle to cope with a new life in a Caribbean that they have very little in common with.

Closing thoughts – time to consider your investing strategies

Firstline Securities Limited offers comprehensive coverage of local and international markets with a bias for the energy sector. Firstline offers a number of unique opportunities to put surplus cash to work either as your asset manager or investment advisor. Please contact us for more details at info@nullfirstlinesecurities.com or at 868.628.1175, we can discuss your investment needs in detail and craft a portfolio that makes sense for you. We look forward to hearing from you.

Comments are closed.