Expert says if Trump imposes tariffs on Chinese goods, it would cause close to economic crisis

By @vitthernandez on
Donald Trump
Donald Trump speaks at election night rally in Manhattan, New York, US November 9, 2016. Reuters/Mike Segar

Like the rest of the world, Australians were shocked with the election of Republican candidate Donald Trump as the 45th president of the US. A Lowy Institute survey, after all, found that his rival, Hillary Clinton, was favoured by Australians 7-1, while half of Australians want to distance the country from the US if Trump would win.

However, since the US-Australia alliance has existed for 70 years, Michael Fullilove, executive director of the institute, believes Trump’s victory would not affect the alliance. But it would be another matter when it comes to global trade, The Guardian reports.

Kim Beazley, former defence minister and Australian ambassador to the US, warns that if Trump would impose the tariffs on Chinese goods as he had threatened during the campaign, it would cause “close to an economic crisis.” The tariffs would have huge implications for the foreign exchange and currency stability since it would be harder to export to the US and it could cause a hike in prices of goods for imports if China retaliates for the planned tariff, says Gorana Grgic, lecturer at United States Studies Centre.

Observers, however, point out that markets are slowly starting to recover from the shock of Trump’s election. After the 5 percent decline of the S&P 500 futures at 1 am eastern time, by 2 pm, it was up 0.7 percent. Gold went down to US$1,282 (A$1,673) from a peak of US$1,337 (A$1,745).

The switch in investor outlook has a lot to do with Trump’s acceptance speech when – like his unexpected win – he surprised the world by praising Clinton which is a turnaround from his “lock her up” campaign rhetoric and not mentioning plans to build a wall on the Mexico border.

But the Wall Street Journal cautions that since markets are about speculations, investors should expect a lot of switchbacks in the next two months from his acceptance speech to his inauguration on Jan 20.

Meanwhile, despite Trump’s speech, a lot of American voters are still depressed with Clinton’s loss that search for possible immigration to Canada crashed the website on Wednesday. Travel companies are optimising their opportunities by offering discounts on flights and vacations to Canada before Trump begins his term on Jan 20, Mashable reports.