Who will trump Trump? (1)
Everyone and his dog seem to be writing about US President Donald Trump. And frankly, I doubt anyone really knows what on earth this man will do. But here’s a few of my thoughts.
The risk for the Philippines is if Trump follows through on his isolationist/protectionist rhetoric. He’s already doing that. On Day 2 he took America out of the TPP (Trans-Pacific Partnership), which would have opened 12 markets to one another in a way that would move this part of the world into an exciting, faster-growth future, where America would have a lead role and most would benefit.
America’s withdrawal could mean the end of the TPP, or at least its emasculation, until a new US president comes along. It will be marginalized without America, and America will be marginalized in Asia. Barack Obama’s “pivot to Asia” will be no more. It encourages China’s ascendancy in Asia, and as an adjunct, the China-inspired RCEP (Regional Comprehensive Economic Partnership) will only further accelerate.
America is being sidelined in Asia by a man who has no idea what he’s doing. He wants to make America great again. This will do the reverse.
Already an isolationist move was his executive order to temporarily ban entry to nationals of seven Muslim-majority countries. Big business is in an uproar against it. The courts have issued the US equivalent of a temporary restraining order.
His ban on Syrian refugees is as heartless as one can get. It’s from a man with no compassion. He seems completely unaware that America grew to greatness from immigrants and refugees. Let more little boys be washed ashore dead.
The Trump presidency seems almost certain to result in more restrictive visa and immigration approvals. The Philippines was issued the second most number of visas at 235,200 (9 percent) in 2015. Filipinos are also the second largest immigrant/ethnic population in America at 3.4 million in 2013. Illegal immigrants risk deportation, but it will take time; legal residents should have no problem. But racist sentiment seems to have been generated by his diatribes.
Another risk is to the BPO/call center business if Trump really wants jobs back in America and tries to force it. And several senators and labor unions are supporting him. But he can’t. US workers earn $18-$20 per hour, and Filipinos $1.7-$2 an hour. No businessman will go back to paying 9-10 times the wage level where wages are a high percentage of costs. The lobbying from business will be intense. And Trump, coming from business, will have to understand that. He has to back down. Anyway, how could he enforce it? He’d need a law, and the majority Congress won’t be willing to earn the ire of their (financial) supporters for reelection. There may be a slowing of the growth rate, but not by much.
It’s the same with other industries. If he imposes, say, 35-percent duty on Chinese goods, the buyers in Walmart, who get 90 percent of their goods from China, will be out in the streets in even more massive numbers than now. Markets are too dependent on each other today, too open for any dictatorial imposition to work. The market will trump Trump.
But indications are that he may well try. He seems unaware of the globalization of things today. Take cars: He wants them manufactured in America. Well, long gone are the days when a vehicle was a simple piece of machinery made in one factory. Today it’s a plethora of products that come from all over the world, and then get assembled. That assembly he equates to manufacture. It’s not; it’s only a fraction of the total cost and process today. And will Americans willingly pay a few thousand more bucks for their SUVs assembled at higher cost in their country?
While America appears to be the largest source of remittances from overseas Filipino workers—$2.5 billion (9 percent) in 2014, for example—the data come from banks and cannot be disaggregated by country of origin. A large portion of those funds may not have come from Filipinos in America but from Filipinos in the Middle East and other countries using US banks to remit funds to the Philippines. Hence, a slowdown in the Middle East economies may have a more significant impact on OFW remittances than restrictions on Filipinos working in America. Concluded next week
E-mail: [email protected] Read my previous columns: www.wallacebusinessforum.com.
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