What Trump’s Victory Means for Singapore
One of the biggest shake-ups in global affairs last year was Trump trumping the US elections. His victory came as a shock to many, and was especially sobering, considering how he was treated as campaign entertainment more than a serious candidate.
From women’s rights to immigration to foreign policies, Trump had made statements that would make a five-year-old cringe. So what does Trump have in store for the United States and how will his plans affect Singapore?
The Trans Pacific Partnership is…Dead
Trump had planned on numerous interesting initiatives, such as building the Great Wall to keep Mexicans out, but the first thing that he’ll do as President of the United States is to pull out of the Trans Pacific Partnership.
The TPP is, or was supposed to be, the biggest trade deal, covering about 40% of the world’s economy. The proposed agreement among 12 countries in the Pacific rim had aimed to reduce regulatory barriers to trade, including the waiver of tariffs. The 12 countries include the US, Japan, Malaysia, Vietnam, Brunei, Singapore, Australia, New Zealand, Canada, Peru, Chile, and Mexico. The TPP is also meant to play a major role in holding the reins on China’s influence in the region.
Trump believes that the TPP is a disaster for the US economy, as key manufacturing jobs would most probably shift to developing countries with lower wages. Obviously, the US is a key player in the agreement.
As Prime Minister Lee Hsien Loong reportedly said; “If, at the end, waiting at the altar, the bride doesn’t arrive, I think there are people who are going to be very hurt, not just emotionally but really damaged for a long time to come.”
The TPP would have been a great boost to Singapore’s trade-reliant economy. Without the US, the deal could still go through, and Trump would apparently be negotiating bi-lateral deals. With the TPP yanked from the table, Singapore’s trade opportunities look dimmer and we may continue to be more dependent on Chinese trade.
Fed Interest Rates Could Hike a Little Faster
Trump doesn’t decide the interest rates, but what his next moves for the US economy will be will have an impact on whether Fed decides to increase interest rates. At present, the consensus seems to be a gradual increase throughout the year, though that is specific as saying you will gradually get older as the year goes by.
Trump’s fiscal stimulus plan includes personal and business tax cuts, as well as increased spending on infrastructure and defense. If this comes to pass and the overall economy outlook is on an upswing, Fed could likely increase interest rates in order to keep a check on inflationary pressure. Ultimately whether or not interest rates increase quicker than what was expected would really depend on how quickly and how much stronger the economy becomes with Trump on top.
What Singapore can expect then, is an increase in our home loan mortgage interest rates. If you’re still on a floating loan package that pegs interest rates to SIBOR, then the increased in US interest rates will also see SIBOR rising, increasing your loan payments.
Tougher Immigration Policies
Trump’s take is to “Buy American, Hire American.” You can almost guess what it means for the mobile and globally savvy person who has the United States as one of the countries on the list of places to work and live in.
While most Singaporeans are probably not competing in the low-wage pool and skilled labor will probably have it easier, one can imagine that it would take a lot more skill and expertise to clinch a position in a US firm. Young, inexperienced executives may not apply.
A Strong US Dollar
Assuming Trump does go ahead on this stimulus plans, such as the increased fiscal spending and overseas income repatriation policy, the US dollar can be expected to remain strong in the year ahead.
What does this mean for Singaporeans?
On a day-to-day basis, shopaholics will find their online sprees to be a lot more painful for the wallet. Overseas students in the US will find their expenses increase, and holiday-makers might find Europe more attractive. Firms would also be hit by increased prices of US imports.
A Lesson For Singapore
In addition to the economics of a Trump victory, perhaps the bigger picture that will impact Singapore in the long run is how politicians can see for themselves the price of selective progress that leaves behind the working class.
Trump and Brexit had collectively shown just how wide the gap is between those who have been made more upwardly mobile as a result of globalization, and those who feel like they have been left behind.
The racial tensions that have been reported also bring to mind just how delicate the balance is in Singapore, and how important it is to be a mindful, respectful, and truly inclusive society.
The days are still early when it comes to realizing the impact of a surprising Trump victory, but as the world already knows by now, unpredictability is the new norm.