Against all odds, Donald Trump became the president of the United States yesterday.
What’s more, he also has the support of a unified Republican Congress behind him, which means he’ll be in a very advantageous position to bring about change.
Economic change is one of the areas of growing concern worldwide.
When the news of him being elected president broke, it wasn’t just people that reacted in shock – the world’s financial markets were rocked.
The NZX suffered its biggest fall in almost eight years yesterday, down 3.3 percent on the day.
There were also long-term worries that Trump’s anti-globalisation stance will increase protectionism and put trade barriers in place against other countries.
Though New Zealand is over 12,000km away from the US, it’s possible the effects of Trump as president will be felt by local Kiwi businesses.
Retail NZ general manager of public affairs Greg Harford says it’s too early to know the impacts of Donald Trump being elected as president on businesses here.
He says Trump doesn’t take office until January, so any potential policy changes are still a while off.
“In the short term, the biggest potential impact is likely to come from any significant changes in the value of the US dollar versus the NZ dollar, which would impact the cost of imported goods – but there’s no sign of an immediate crash,” he says.
“In the longer-term, the US appears likely to become more isolationist in its approach, and less open to free trade.
“This may make it harder to source goods, and harder to sell directly into the US – but we really need to see exactly what policies the new administration will be implementing before we are able to be certain about what the impacts will be.”
Business NZ chief executive Kirk Hope had a grim outlook on the situation.
He said that if carried out, Trump’s trade policies would not be in New Zealand’s best interests.
“The US is New Zealand’s third largest export market,” he said.
“Trade with the US earns New Zealand over $5 billion a year in products including meat, dairy and wine, and over $2 billion a year in services. A reduction in this level of trade would make a difference to New Zealand’s growth prospects.
“International trade generally could become more uncertain, as statements made during the Presidential campaign indicated an intention for the US to impose large tariffs on imports into the US from China and Mexico.
“This raises the possibility of tariff retaliation and a more general increase in protectionism by other countries. The overall result could be a general decrease in international trade. This would not be in New Zealand’s interests, given that we are a highly trade-reliant economy.”
He said the hope is that the statements made by Donald Trump during his campaign about trade were just rhetoric so the US will keep its current approach to trading.
ExportNZ had a similar view, with executive director Catherine Beard saying she hoped common sense would prevail.
“This would include the US taking a leadership role on trade in the TPPA region,” she said.
Trump notably staunchly opposes the TPP in an economic plan he released in September.
“There will be no Trans-Pacific Partnership, even if the President and Congress are reckless enough to pass it in a lame-duck session against the will of the American people,” he said.
Meanwhile, a a recent report from US-based global financial services firm Morgan Stanley has found that if Trump’s proposals restricting trade and immigration are carried out, it could have a huge impact on the retail economy in the US to people on both sides of the till.
“Elevated economic policy uncertainty, as well as a possible deportation-linked decline in consumer demand and labour under a Trump presidency would counteract the consumer spending benefit from lower taxes,” Morgan Stanley consumer economist Paula Campbell Roberts said.
Whatever happens next, companies the world over will be watching with bated breath.