For me, the main news item of last week was the report that George Orwell’s classic novel 1984 had again hit the best seller lists and was sold out in the US. This must be the most fitting summary of Donald Trump’s first week in the White House as US president. His actions can also be described by the words protectionism, exclusion and alternative facts. Companies have also come under direct attack and been threatened with taxes if they don’t shift more of their production to the USA. This is a previously unknown style of politics, indeed it is one that nobody had even believed possible.
The new US president styles himself as a ‚doer‘ who wastes no time in fulfilling his election pledges. Politics by executive order might have great media impact in the short term, but it is not sustainable. It seems that very few of the executive orders have actually been agreed with the ministries concerned. And in some points they are not even compatible with the US constitution. Thus, the actual implementation of the dramatically-orchestrated executive orders is likely to hit major legal hurdles. But whether this is a matter of concern for Donald Trump is highly doubtful.
If the current political style of the new US president becomes rooted in America’s institutions over the long term, this would be very detrimental to growth. In turn, this would also have negative implications for the global economy. For my part, I do not expect such a development. I believe Trump’s hyperactivity will subside and that time-tested institutional rules will again find their place in Trump’s government. Over the near term, the economy can even be expected to grow as the new US administration is set to make the announced tax cuts at the end of the year.
Yet there are also positive side effects to Trump’s political style. Signs are emerging of a rise in global solidarity among many countries that champion migration and free trade. Europe can exploit this opportunity and position itself as the antithesis of the new US politics, and thereby strengthen its role in an increasingly merging world. Should this prove successful, the negative fallout from a slowdown in growth in the US is likely to be less pronounced in Europe and elsewhere in the world.
This leaves us with short-term growth stimulus and, in the medium term, with the opportunity of solidarity with many countries. The risk is that Trump’s political style establishes itself in other countries though. In case of the latter, we would then be faced with a longer period of slow growth. While this possibility exists, it is, for me, still only a risk scenario.