In a thunderous echo of the Brexit moment, Donald Trump defied pollsters, media pundits, political adversaries within his party and ivory tower liberals to defeat Hillary Clinton and be voted as the 45th president of the US. This time, however, the markets seemed half-prepared for the result they did not want, not reacting as virulently they did after June 23 when the UK voted for an economic divorce from the EU. Trump’s anti-globalisation election theme — of making America great, and bringing jobs back by restricting the outflow of capital and the influx of labour and goods — struck a chord with white, blue collar Americans in particular, just as the Brexiteers won over the Labour party’s support base in the UK. It can well be said that globalisation is in grave crisis. These are times of considerable uncertainty — at least until Trump spells out what he plans, and what’s more, whether he is 100 per cent serious about election promises such as scrapping the TPP, slapping a huge tariff on Chinese goods, erecting a wall on the border with Mexico, and setting a higher minimum wage for firms doling out H1-B visas to Indians. The world rightly apprehends that a protectionist America will drag down the world economy with it. Trump believes he can make America grow at 4 per cent by doing so, but that claim has been contested. Steep tariff hikes (Trump spoke of a 35 per cent tariff on Chinese goods) could lead to a trade war led by China, besides mayhem at the WTO for violation of the ‘most favoured nation’ principle. Studies point out that in a worst case scenario this could lead to a 2.9 per cent decline in US consumption in 2019 and a 9.5 per cent drop in investment that year. Such a policy looks unrealistic.

India’s fears are understandable as the US accounts for 20 per cent of its merchandise exports. However, curbs on Chinese imports may open up prospects for India’s textiles, mineral fuels, electrical machinery and organic chemicals industries. Pharmaceuticals, a major export to the US, may run into uncertainty. Besides, India has diversified into Asian markets, with the OECD region looking sluggish anyway. India’s IT exports of $80 billion to the US, over two-thirds of its total IT exports, could come under a cloud if Trump actually acts on his H1-B visa promise. At stake are about 1.7 lakh such visas issued each year. A reduction in US corporate taxes, from 35 per cent to 15 per cent, could lead to a relocation of US companies from India in sectors such as automobiles, IT, computers, insurance and chemicals.

In geopolitical terms, a Trump presidency may lead to a reduction in tensions with Russia; whether his economic hostility towards China spills into the strategic realm remains to be seen. India’s concerns over terrorism are likely to get US support. The world will never be the same after Brexit and Trump. The challenge is to adapt globalisation to the emerging concerns.

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