Foreign Affairs

What Trump’s re-election would mean for us

All the talk right now is about impeachment, but Donald Trump could easily be re-elected on November 3, which would keep hurting New Zealand. Bernard Hickey looks at a big question for 2020: Will Trump get re-elected?

Will Donald Trump be re-elected and should we care? Sadly, possibly yes and definitely yes.

(This is the second of Bernard Hickey's series on the Big 8 questions for 2020. The first was: Will Labour win a second term?)

The still-very-possible re-election of Donald Trump on November 3 would extend the risks for New Zealand of trade wars between America, China and Europe that would slow global economic growth and force us to pick sides on 'sphere of influence' questions such as security and technology for another four years. Hopefully that would be the worst of it.

Does it matter?

The first instinct with any piece of information or news or question about Trump is to ask if any of it matters. There's just so much news and debate spewing out of global news and social media that is noise that finding signal is difficult. It's tempting to ignore most of it and hope it just washes away. Some argue Trump's own lack of apparent strategy or ability run a coherent White House will stop him from doing too much damage, and that America's constitutional checks and balances will be enough to prevent very bad things happening.

But with more than enough power and supporters willing to do his bidding (or make him do their bidding), Trump has already done enormous damage to the previous (albeit shaky) global 'Washington consensus' around trade liberalisation and spreading democratic norms. The biggest and most powerful of world's longest-running democracies is now led by a man who would openly admires dictators and denigrates democracy. The latest revelations this week that associates of Trump (apparently in jest) suggested killing a US ambassador to the Ukraine show how mafia-like Trump's broad circle has become.

Trump has already increased import taxes on American consumers of Chinese products, triggered a Chinese tariff backlash, partially imposed tariffs on steel imports (including New Zealand's but not Australia's) and imposed fresh sanctions on all manner of financial flows in and around Europe and Asia in his fights with Iran and North Korea. This Reuters graphic explains well how the trade wars have hurt developing and other economies more than America because they trade more. The IMF warned in October that the trade wars would cumulatively reduce global GDP by 0.8 percentage points or US$700 billion this year.

Spark, Huawei and the future of 5G

Trump has also fundamentally changed the way America views its relations with China and the broad future of technology as the basis for the global economy and security. New Zealand's tip-toeing around the issue of Huawei's involvement in Spark's 5G rollout is the most high profile example of how we're being caught in the middle. See a fuller version explaining the complications on 5G in this piece from Robert Ayson on Newsroom Pro on Thursday morning.

The tone of the coverage many see in New Zealand suggests Trump either cannot win a second term or will be unable to serve out his current one, but the facts on the ground in America show he is unlikely to be removed from office through impeachment and could easily win a second term in November against a Democratic nominee who cannot connect with the mid-western and southern white voters that won the Presidency for Trump in 2016.

Full impeachment is unlikely

The current trial of Trump in the US Senate on impeachment charges is unlikely to see him removed because Republicans control the Senate and appear determined to back their party's man, regardless of his many and varied flaws. The current crop of Democratic candidates is being winnowed down, but none of them have yet generated the excitement or the obvious electability that Bill Clinton did in 1991 or Barack Obama did in 2008.

A continued Trump presidency would further complicate our delicate relationship with China and risks deepening any global economic slowdown over the next four years. We can only hope that the various checks and balances in the global economic system (particularly via central banks cutting rates and printing money) would be enough to prevent too much damage...and that Trump doesn't start a war.

The Iranian incident earlier this month was a close thing and has yet to be resolved, while tensions with North Korea could easily bubble up at any moment. The second half of 2020 will be a time for those making decisions in business and government to keep their political ears and eyes open with crucial elections both here and in the United States.

This was the second in the series: Bernard Hickey's big 8 questions for 2020:

The first was Will Labour win a second term?)

Over the coming days, we’ll detail those other 6 big questions for 2020, including:

Will the Government appoint an Auckland Light Rail builder?

Will Huawei be allowed to build any part of Spark’s 5G network?

Will NZ conclude a trade deal with the EU?

Will Rio Tinto shut down Tiwai Pt?

Will NZ regulate Big Tech?

Will NZME buy Stuff?

Get it early – This article was first published on Newsroom Pro and/or included in Bernard Hickey’s ‘8 Things’ morning email of the latest in-depth business and political analysis. Get it early by subscribing now or starting a 28-day free trial.

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