NOREENA HERTZ: Start praying – we face an economic earthquake if Donald Trump becomes President – Published on
There are many reasons why people might be concerned about a Donald Trump victory – from his attitude to women to his endorsement last week by the Ku Klux Klan. But what would a Trump presidency mean for the world economy?
I fear we would wake up on Wednesday facing a global recession within the next 18 months. In the immediate term – I’m talking hours and days – it’s extremely likely the US stock market would plunge.
When it was announced that Hillary Clinton’s private email server was back under investigation, the Dow Jones fell by 125 points – about 0.7 per cent. If the mere prospect of a Trump victory so spooks the market, imagine if he actually won.
I fear we would wake up on Wednesday facing a global recession within the next 18 months. In the immediate term – I’m talking hours and days – it’s extremely likely the US stock market would plunge
I fear we would wake up on Wednesday facing a global recession within the next 18 months
Leading hedge fund managers I’ve spoken to estimate a fall of around 5 per cent. And this would not be confined to America – in our interconnected world it would also mean falls in Frankfurt, Tokyo, and London. Anyone with a UK pension, or a stocks and shares Isa would see the value of their investments fall.
The impact of Trumponomics longer term is arguably of even more concern. Throughout the campaign he has threatened to tear up trade agreements and impose a whopping 45 per cent tariff on Chinese goods. Were Trump to make good on his protectionist rhetoric, we could be facing a major global trade war.
This may, of course, all be bluster, and presidential power is not absolute. But history teaches us not only that US Presidents tend to deliver on their main campaign pledges, but also that America is not averse to using protectionism when it suits. Remember Obama’s tariffs on Chinese tyres a few years back?
Only last week, 370 economists, including eight Nobel Laureates, signed a letter warning against a Trump victory because ‘he promotes magical thinking and conspiracy theories’
Noreena Hertz is the ITV News economics editor
To book her for your next event: email: [email protected] or call + 353 1 2354905