Date
8 December 2016
Mitt Romney, the former governor of Utah, is one of the candidates Donald Trump is considering to appoint as his secretary of state.  Photo: Reuters
Mitt Romney, the former governor of Utah, is one of the candidates Donald Trump is considering to appoint as his secretary of state. Photo: Reuters

What will Trump’s presidency be like?

The Donald Trump presidency continues to draw attention because it could represent a major shift in areas that matter for Asian investors.

Analysts are now focusing on the US president-elect’s choices for cabinet and sub-cabinet positions as his picks will indicate how much of his campaign rhetoric will become policy stances and how effectively these policy stances may be implemented.

In the short term, Trump’s announcement that his administration will withdraw from the Trans-Pacific Partnership (TPP) agreement has drawn the most attention in Asia.

On top of being a trade deal, the TPP also contains provisions on environmental protection, corporate governance, intellectual property rights, labor standards and other issues often seen as domestic.

By setting a common policy framework, President Barack Obama and his counterparts have hoped to transform the regulatory framework in participating countries.

In their eyes, this would allow for economic development to proceed in a more sustainable and fairer environment.

In Japan, Prime Minister Shinzo Abe has also linked his broader reform program to the passage of the TPP.

Since the pact requires that, by economic weight, at least 85 percent of the signatories must ratify the treaty for it to go live, an American withdrawal means the end of the TPP in its current form.

The deal’s end will also cast doubts on Abe’s ability to pass his economic reform program, and this is why Abe traveled to the United States to talk to Trump within two weeks of his election.

Trump’s policy platform, however, includes a strong emphasis on deregulation. He claims the cost of compliance has disproportionately affected small and medium-scale enterprises in America.

Thus, it is not surprising that while he has offered reconciliatory remarks or backtracked from many other issues, he has held firm on US withdrawal from the TPP.

On the other hand, Trump seems to be less certain on foreign policies, which will directly affect geopolitics in Asia.

This is not surprising: Trump’s business background has probably given him a much better grasp of trade and economics than of foreign affairs policies.

As of this writing, Trump is choosing between Rudy Giuliani, the former mayor of New York, and Mitt Romney, the former governor of Utah, to be his secretary of state.

Giuliani is more hawkish than Romney and his position is close to Trump’s position on various issues during the campaign trail.

In fact, in an open forum at the Wall Street Journal shortly after the election, Giuliani mentioned several possible foreign policy thrusts, including increasing US naval presence in the Western Pacific region. Such a plan could have a huge impact on every Asian economy.

Romney is seen as more practical and moderate. However, his experience in foreign affairs is not much stronger than Trump’s.

Thus, if Trump decides on a more moderate foreign policy stance, he may appoint someone who is not currently mentioned by the press.

Note, however, that many presidential appointments require Senate approval.

As such, Trump may sometimes have to compromise with the rest of the Republican leadership by appointing officials that are more moderate than he would like.

Furthermore, Trump is known for managing through teams of rivals.

He has often given similar levels of authority to individuals with different plans and allowed them to compete for his approval.

This is apparent in his appointment of his chief-of-staff and his chief strategist. Reince Priebus, the chairman of the Republican National Committee, has become the White House chief of staff, and Steve Bannon, Trump’s campaign manager and founder of a right-wing news website, has become his chief strategist.

While Priebus represents the Republican establishment, Bannon speaks for the populist wing.

With such opposing personalities and views in his inner circle, Trump may have to put off some of his policy decisions until the competing teams have thoroughly presented their arguments.

Nonetheless, we expect further volatility in the market as analysts and investors gain, bit by bit, more insights into what the Trump presidency will be like.

– Contact us at [email protected]

RT/CG

Chief Investment Officer, Admiral Investment Ltd.

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