What a Donald Trump victory means for the worldwide financial system
As the world wakes up after election day in the US, it is looking clear that Donald Trump is headed for victory once again.
Though not all votes are counted, Trump has taken the swing states of Georgia, North Carolina and Pennsylvania. He is currently on track to win Michigan, Nevada and Wisconsin and has already claimed victory in a speech to his supporters.
The Republicans have also taken control of the US Senate, which will make it easier for Trump to get his economic ideas passed into law. Though the president has a number of direct executive powers, the last hurdle will be control of the House of Representatives.
Trump’s promise of big tariffs
A Trump win would put a new, rough spin on the global economy.
Many of his economic ideas are similar to his first time in power. This time though they are more refined and he has more experience and determination to push them through.
He has promised tariffs of 10% or 20% on all goods imported into the US and even higher tariffs of 60% on Chinese-made things.
At the same time, he has promised to bring manufacturing home, cut taxes and deport millions of irregular immigrants.
Though some of these promises may seem extreme, they were enough to convince many voters struggling with higher food and housing prices that they were better off economically supporting Trump.
How are the global markets reacting?
Trump’s policies will have a big impact on the US economy, but they will also have big ripple effects across the globe.
Before the election, businesses around the world had already taken a Democratic or Republican win into account and made contingency plans.
Now that a Republican sweep seems likely the markets are reacting.
Stock markets in Asia, the first to open after the election, had a mixed reaction to a Trump win. Japan’s Nikkei and Australia’s S&P/ASX 200 were up. While Hong Kong’s Hang Seng Index was down. Mainland Chinese stocks did not move much and European markets have been muted, so far.
Other stock exchanges are yet to open.
Bitcoin hits an all-time high
Trump has promised to make America the “crypto capital of the planet” by halting regulation and being more open to innovation. His support for cryptocurrency has given hope to the industry in the US.
Bitcoin, the most popular cryptocurrency, hit a record of over $75,000 (€69,800) at one point on Wednesday.
Many cryptocurrency advocates like Elon Musk want to see him elected. Some individuals and crypto companies have donated millions to Super PACs to support candidates of their choice.
The dominance of the US dollar
As bitcoin surged, a number of other currencies have not done so well against the American dollar
The European Union and countries like China, Japan and Mexico and are rightly worried about tariffs. On Wednesday, their currencies all lost valued against a surging US dollar. The Mexican peso had its biggest fall in three months as it is particularly vulnerable to new US tariffs since it is the country’s largest trading partner.
A more expensive dollar will make US goods more costly for others in general. It will also make global commodities that are priced in dollars like oil more expensive for buyers paying in other currencies.
This article will be updated as the day progresses.
Edited by: Ashutosh Pandey
