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Trumpworld? The Consequences of the 2016 U.S. Election for Economic Globalization and International Order

Jonathan Reid, Guest Contributor

On March 15, 2017, a long-time friend of Tsinghua University, Niall Ferguson, Senior Fellow at the Stanford-based Hoover Institution, returned to Tsinghua University to engage in a dialogue with SEM Dean Yingyi Qian. The dialogue focused on the economic, cultural, and political implications of the 2016 U.S. election of Donald Trump as President.

Dialogue between Dean YingYi Qian and Niall Ferguson

The two thought-leaders addressed a number of topics relevant to the evolving world order, including assessments of political shifts in Great Britain and the United States, President Trump’s true reach in terms of power and influence, potential results of Trump’s first term in office, and implications of his presidency for China and the rest of the world.

The discussion began with an overview of what Ferguson referred to as a “mood of disillusionment” within Great Britain and the United States, whichreverberated throughout the world. Ferguson first noted that Brexit, Britain’s separation from the European Union (EU), occurred as a result of the EU’s inability to cope with its recent financial crisis, and the mass migration of refugees from surrounding war-torn countries into Europe, notably Syria, Afghanistan, and Iraq. In addition, Ferguson highlighted the growing divide between global elites and non-elites in both Great Britain and the U.S., the misjudgments of political experts who wrongly predicted the Brexit outcome and the election of President Trump due to a disconnect of elite experiences from the everyday experiences of common people.

With both Brexit and the election of Donald Trump occurring at such narrow margins, the perception was that of populations willing to take a chance on alternatives which may not reflect the established rule of order. Ferguson echoed this sentiment of public awareness held by Dean Qian and many in attendance, noting that “narrow decisions have big consequences.” This diversification of public voice spoke to not only the impact of economic globalization, but also to a cultural globalization that promotes a multiculturalism in thought and practice that many world powers have yet to fully accept.

With President Trump’s rhetoric causing an uproar in the media, Dean Qian and Ferguson took a moment to focus on the President’s true political power and where he stands to make the largest political and economic impact. Both scholars highlighted the areas of tax reform, healthcare reform, and deregulation as being within Trump’s immediate control, while Speaker of the House Paul Ryan and other members of Congress having more power over the overall economic plan, indicative of the checks and balances of U.S. government. Dean Qian noted U.S. tax reform as being the most critical area for the health of the global economy, and that the creation of the right formula for corporate tax and income tax would produce results that support producers and consumers around the world. Both Dean Qian and Ferguson leaned heavily into the Border Adjustment Tax, noting that it must create an upward adjustment in the U.S. dollar to boost consumerism. Dean Qian cautioned that the new tax reform could result in an increased U.S. budget deficit, albeit temporarily.

Niall Ferguson

The controversy surrounding Trump’s election and his First 100 Days decision-making led many to consider how long he will serve as President. Dean Qian and Ferguson shared various scenarios which could result in prolonged success for Trump and a potential second term. Ferguson noted that the combination of tax reform, deregulation, and investment into U.S. infrastructure could boost the U.S. economy. He reinforced this by noting President Trump’s commitment to advocates of Keynesian economics, who believed in more private sector intervention and corresponding public sector support to boost jobs and spending. This hands-on approach, according to Ferguson, could lead to growth and increased support for Trump around the mid-term elections.

The discussion noted many Trump-led factors which may result in his re-election, but there were also outside considerations. One notable area was the Democratic Party’s ability to deal with its own inefficiencies and field a viable presidential candidate. Ferguson noted that the party’s avoidance of self-destruction could have huge implications on the longevity of President Trump’s administration, and Trump’s decisions which impact the global community.

Dean Qian and Ferguson concluded their dialogue by focusing on other implications of the Trump presidency, particularly effects on China. They highlighted China’s entry into the World Trade Organization in 2001, and the unprecedented growth the country has experienced under free trade. Ferguson noted China as the principal beneficiary of globalization, stating that the nation’s economy has gone from “marginal to the second largest in the world” and that the Trump presidency will impact that. Ferguson’s closing remarks centered around unity, noting that Trump’s election will lead to more collaboration amongst the United Nations Security Council and other groups for the purpose of maintaining and balancing international order.