What Donald Trump’s election win means for the world financial system – DW – 11/06/2024 | EUROtoday

As the world wakes up after election day within the US, it’s taking a look at one other Donald Trump presidency.

The Republicans have additionally taken management of the US Senate, which is able to make it simpler for Trump to get his financial concepts handed into legislation. Though the president has a lot of direct govt powers, the final hurdle will likely be management of the House of Representatives.

Trump’s promise of huge tariffs

A Trump win would put a brand new, tough spin on the worldwide financial system.

Many of his financial concepts are much like his first time in energy. This time although they’re extra refined and he has extra expertise and dedication to push them via.

He has promised tariffs of 10% or 20% on all items imported into the US and even larger tariffs of 60% on Chinese-made issues.

At the identical time, he has promised to convey manufacturing dwelling, minimize taxes and deport thousands and thousands of irregular immigrants.

Though a few of these guarantees could appear excessive, they have been sufficient to persuade many citizens combating larger meals and housing costs that they have been higher off economically supporting Trump.

How are the worldwide markets reacting?

Trump’s insurance policies may have a huge impact on the US financial system, however they may even have huge ripple results throughout the globe.

Before the election, companies all over the world had already taken a Democratic or Republican win into consideration and made contingency plans.

Now {that a} Republican sweep appears doubtless the markets are reacting.

Stock markets in Asia, the primary to open after the election, had a combined response to a Trump win. Japan’s Nikkei and Australia’s S&P/ASX 200 have been up. While Hong Kong’s Hang Seng Index was down. Mainland Chinese shares didn’t transfer a lot and European markets have been muted, to this point.

Other inventory exchanges are but to open.

Bitcoin hits an all-time excessive

Trump has promised to make America the “crypto capital of the planet” by halting regulation and being extra open to innovation. His help for cryptocurrency has given hope to the business within the US.

Bitcoin, the preferred cryptocurrency, hit a report of over $75,000 (€69,800) at one level on Wednesday.

Many cryptocurrency advocates like Elon Musk need to see him elected. Some people and crypto firms have donated thousands and thousands to Super PACs to help candidates of their selection.

The dominance of the US greenback

As bitcoin surged, a lot of different currencies haven’t carried out so properly in opposition to the American greenback

The European Union and international locations like China, Japan and Mexico and are rightly apprehensive about tariffs.

On Wednesday, lots of their currencies misplaced worth in opposition to a surging US greenback. The Mexican peso had its greatest fall in three months as it’s significantly weak to new US tariffs since it’s the nation’s largest buying and selling companion.

A dearer greenback will make US items extra expensive for others typically. It may even make world commodities which can be priced in {dollars} like oil dearer for patrons paying in different currencies.

European fears and alternatives

Besides commerce difficulties and tariffs, a lot of Eastern European international locations concern that Trump could weaken and even undermine America’s important help for NATO. This concern, together with worries about the way forward for the battle in Ukraine and who can pay, has pushed down quite a few Eastern European currencies just like the Hungarian forint.

To appease Trump, Europe could must up its protection spending typically and its help for Ukraine specifically. On prime of that, lots of Trump’s insurance policies might result in inflation with roots within the US and damage different international locations’ means to borrow cash.

Taken collectively, such insurance policies “would have particularly negative consequences for Mexico, but also for the eurozone, and closely correlated with it the Central and Eastern European region,” Piotr Matys, a senior FX analyst at In Touch Capital Markets, advised information company Bloomberg.

“Donald Trump’s second term in office will be a greater challenge for German and European industry than his first term,” warned Thilo Brodtmann, head of the German Mechanical Engineering Industry Association, in an announcement.

“We must especially take his tariff announcements seriously,” Brodtmann mentioned, including that tariffs would pressure world commerce and will power China and European international locations to additional develop their very own financial strengths.

Edited by: Ashutosh Pandey