TRAVEL ADVISORY – Donald Trump Wins the US Presidential Election

Key Points:

• Businessman Donald Trump has beaten Hillary Clinton in the race to the White House.
• Asian stocks have fallen sharply but European markets have generally remained calmer.
• Republicans win both the House of Representatives and the Senate.

Situation Summary:
Political: The US electorate have elected Donald Trump after a bruising election campaign. Trump is set to win with a large majority in the electoral college, with only four states yet to be called (at 1030 UTC). The pre-election polls proved to be inaccurate. Hillary Clinton was expected to win and to serve as a status quo candidate. She has accepted the result and conceded to Donald Trump. International markets have taken a hit, with Japan’s Nikkei dropping 5.4% and the UK’s FTSE 100 also falling slightly in early trading. The Mexican Peso has also been severely affected, falling more than 13% against the US Dollar. Trump’s victory speech has, however, reassured the European markets to some degree. The Republicans also won majorities in the both the House of Representatives and the Senate.

Intrinsic Comment:
Instability, insecurity, and uncertainty are expected to prevail in the short- to medium-term and perhaps in the long-term also. The short- and medium-term effects can already be seen. Asian markets have suffered. Apart from the Nikkei, Hong Kong’s Hang Seng was down 2.2% and Australia’s ASX closed 1.9% down. Japan has begun discussing depreciating the strength of the Yen after it appreciated in value by 3% against the US Dollar. Domestically, it is likely that civil unrest will continue at least in the short-term. The presidential campaign was marked by a series of demonstrations and counter-demonstrations with race playing a major issue at times. Trump faces an uphill battle to bring the country back to together in a cohesive fashion after such a divisive campaign.

In the long-term, it is difficult to anticipate what effect Trump’s election may have. In recent elections, both major party candidates were seen to be not too dissimilar in terms of foreign and trade policies. Trump is viewed differently. If he governs as he has campaigned, then there are expected to be serious domestic and international ramifications. Trump’s espousal of isolationist security and trade policies could bring about international dangers. International economic growth is expected to face some distress if trade deals are renegotiated and US trade policies become more insular. It is possible that rising nations such as China or India will take up some of the economic slack left by the US if Trump pushes for such policies.

In foreign policy, Mexico-US relations are expected to become strained, to the detriment of both countries. If Trump’s isolationist rhetoric is transformed into action during the next four years, the world could be set for a series of security issues. Trump’s election may be of encouragement to Vladimir Putin and Russia. Trump has criticised NATO and proposed drawing back some of Washington’s commitments to the security pact. Apart from Europe, security issues could arise in East Asia if China is encouraged to be more assertive and clashes with other regional powers such as Japan and India. North Korea may also be encouraged to continue nuclear testing if the US rolls back its international commitments and integration. Trump’s plan to increase bombing of the Islamic State (one of his only stated foreign policy positions) may increase the number of refugees seeking to enter Europe, and create more martyrs to inspire would-be Islamic terrorists.

Republican victories in the House and Senate should also assist Trump in pushing through some of his legislative goals. Unless, of course, the Democrats are as active in filibustering his plans as the Republicans have been under President Obama.

The trajectory of Trump’s premiership will depend greatly on the people with whom he surrounds himself and his legislative plan, which was not explicitly presented during the campaign.