In another exciting geopolitical week, President Trump introduced radically different immigration and trade policies that threaten the economic prosperity of some nations (and companies) like India and the mobility of refugees. Global reaction to these policies has been far more negative than in the United States where the half the country that voted for the new President supports these evolving protectionist measures.
Prime Minister Theresa May from the U.K. came to Washington and was honored with being the first foreign leader to meet with President Trump in the Oval Office. The meeting resurrected imagery of President Ronald Reagan and Prime Minister Margaret Thatcher in more ways than just the obvious.
Meanwhile, lost amid the more controversial actions of his executive orders was the idea from President Trump to create a new Marshall Plan for the Middle East in an effort to help solve the immigration crisis back at its source.
As polls show upcoming elections in Europe will likely usher in yet another wave of populism, security analysis firms are evaluating which countries’ national governments on the continent will survive and which will see potential Brexit- and Trump-styled sea changes.
In Asia, Japan’s central bank has reacted to the uncertainty of President Trump’s radically different policies by continuing quantitative easing and holding their interest rates steady as they warned about the potential effects from these on their economy. This is why gold makes sense in your retirement account, because it offers insurance and protection in market turbulence.
President Trump’s New Immigration and Trade Policies Threaten Indian Technology Companies Even as Closer Bilateral Relations Develop
Lost amid the frustrated and even hostile responses from business and international leaders especially in Europe is another story of the impact of President Trump’s new immigration and trade policies. Nomura based analysts have warned that the new “America First” policies of the American President may cause harm to the Indian software companies and their offshoring model they have implemented.
The harder line on immigration and trade protectionism is impacting other nations, India among them. India Chief Economist Sonal Varma of Nomura wrote in a note:
“Immigration restrictions are the main source of India’s vulnerability. The viability of the offshoring model of Indian software firms would be at risk.”
Reuters has reported that President Trump’s administration is considering reforming the H-1B visa. Their sources claim that Stephen Miller, senior policy adviser to the President, has proposed eliminating the presently used lottery system in awarding visas and replacing it with potentially a new system which rewards those visa requests for highest paying salary jobs.
Among other impacts this would have for skilled labor attempting to enter the United States there is the knock on effect of remittances from the United States to India. The U.S. remains the second biggest source of Indian remittance as of 2015 with approximately $10.96 billion sent back. This is almost 16 percent of all inflows back to India.
Besides this, India’s exports could similarly be damaged by the greater amount of trade protectionism the new administration is working towards. Nomura’s report warns that this includes many important Indian exports sent to America, such as pharmaceutical products, jewelry and gems, car parts and products, and textiles for clothing, as this chart above shows.
Despite the potential danger this poses to the world’s largest democracy, India also stands to be a primary beneficiary from the President’s new foreign policy goals. President Trump phoned Narendra Modi the Prime Minister of India in his first couple of days on the job. The official statement released revealed that the pair talked about the concrete ways they can improve the bilateral relationship in important areas like defense and the economy.
Policy experts have weighed in, figuring that the new administration is seeking an effective Asian partner to counter balance the rising Asian domination of China. They have claimed that it is the only way the U.S. will be capable of projecting any form of meaningful influence in the Asian region.
Prime Minister May and President Trump Determined To Rule the World in Reagan- Thatcher Replay
It is no accident that observers have noted the strikingly similar airs of the meeting last week between British Prime Minister Theresa May and President Trump and those held by President Reagan and Prime Minister Thatcher in the 1980s. The Prime Minister repeatedly hit on the themes of renewing the lapsed “special relationship” which the Obama administration allowed to suffer from neglect over the past eight years. She talked about the importance of Great Britain and the United States leading the way forward in a changing world.
This first meeting with a foreign leader in the Oval Office demonstrated the President’s sincere commitment to the idea of reviving the old traditional alliances of America which he has continuously mentioned throughout the campaign and time as President-elect. Prime Minister May went along with the idea by shifting the British foreign policy to come into line with President Trump’s own vision for the world.
Among the themes the two discussed, May encouraged the two nations and their respective leaders to stand shoulder to shoulder and take on the new challenges of and threats to the world order, such as the rise of Asian economies like China which so many are fearful will “eclipse the West,” a surging Russia, and the threats posed by Islamic radicalism and terrorism. She told a thunderously applauding Republican congressional session:
“So we – our two countries together – have a responsibility to lead. Because when others step up as we step back, it is bad for America, for Britain, and the world. This cannot mean a return to the failed policies of the past. The days of Britain and America intervening in sovereign countries in an attempt to remake the world in our own image are over. But nor can we afford to stand idly by.”
Her new stance reveals a shift in the Anglo-American global interventionism which began the wars in Afghanistan and Iraq. It puts her squarely in line with the new “America First” agenda of President Trump. It also reverberates well with the many British Brexit voters who feel left out by an unsympathetic globalization movement that left many out in the U.K.
A New Marshall Plan for the Middle East Begins to Take Shape
Another overlooked part of President Trump’s master plan that arises from the temporary ban on immigration has to do with his ideas to address the problems in the Middle East itself. This is after all the source of the forces driving Middle Eastern people to immigrate away to Europe, the United States, and Canada in the end.
The President calls this a “Marshall Plan” for the Middle East. He plans to assist nations in that volatile and troubled region with American support to better the lives of the ordinary citizens living there. The goal is to get 60 million individuals working on infrastructure and electricity projects, per close advisor and friend to the President, Thomas Barrack.
In support of this ambitious agenda, Trump phoned key American allies in the Middle East. These included King Salman of Saudi Arabia and Crown Prince Sheikh Mohamed bin Zayed of Abu Dhabi (United Arab Emirates). No doubt he will also be talking with long-time, stalwart American ally King Abdullah II of Jordan in the near future on this project.
Populist Challenges to Europe Threaten to Sweep Away Existing Elite Establishments
Last week a report was released by Verisk Maplecroft on the subject of instability in the world and especially in Europe for the year 2017 and beyond. The report notes what many analysts of European nations with elections have previously opined. The continent and EU are facing a raft of dangerous elections which may lead to the sweeping away of the establishment political elite figures who run those nations presently. The analysis holds out hope that both Germany and France, the twin bedrock founding nations of the EU, have a good chance of withstanding the populist tidal wave.
Despite this, it notes that the anti-immigrant parties will gain influence and power in these upcoming elections. In the Netherlands, Geert Wilders of his Party for Freedom leads the polls in this all-important first EU election scheduled for the year. In Italy, Beppe Grillo of the Five Star Movement would likely win if Italian elections being scheduled for later in the year were held today. In France, Marine Le Pen has been leading in the French election polls, and now she is courting the workers and labor unions in a bid to upset the election results ala President Trump.
The Greek crisis also has the potential to flare again, while Britain continues the painfully slow and messy steps to withdraw from the European Union. The chart below demonstrates how the government stability index of Britain is now even with Poland, per Verisk Maplecroft.
The results come from a predictability model which considers the executive branch stability three years from now based on factors including potential weakness in popular support as well as the effective means for peacefully transferring power.
Japan’s Central Bank Reacts to President Trump-Fueled Market Uncertainty
Even steady Japan is wavering in the face of President Trump’s new policies. The Bank of Japan chose to keep up its present dramatic measures of monetary easing in the two-day meeting that began Monday. Part of the motivation for this lay in the concerns surrounding the “uncertainty” created by the new American administration’s unconventional policies. Bank of Japan Governor Haruhiko Kuroda stated:
“As the U.S. economy has great effects on the global economy and international financial markets, we are going to closely watch the direction and the impact” of Trump’s policies.