Greg Wright: Trump's victory must not usher in age of protectionism

As the world prepares for Trump to move to the White House, we must take a cool, hard look at what his period in office will mean for the global economy.

Will the gracious words of his victory speech set the tone for his presidency?

Or shall we see the emergence of an aggressively insular and protectionist America, which will be very bad news for the people who elected him, and Britain.

There are real fears that Trump’s administration could create trade barriers that would lead to a slump.

We must all hope that the heated rhetoric of the hustings proves to be just hot air, and he will adopt a pragmatic approach when he finally takes office.

For businesses, his election just adds another element of doubt, during a year which has served up uncertainty by the bucket-load.

As Professor Christian Stadler, of Warwick Business School, observed: “We simply don’t know which of his campaign promises will translate into policy.

“For UK business it is a particularly big threat as trade with Europe is likely to decline as a result of Brexit, so companies have to offset business losses, but the US will also be a more difficult place to trade with.

“Trump has spoken out against free trade, so expect a dramatic rise in import duty in some industries, such as steel.”

With Trump in the White House, the negotiations over the Transatlantic Trade and Investment Partnership with the EU are likely to end, according to Prof Stadler.

As the UK will no longer be in the EU this will not have a direct effect, but it suggests that it might be difficult for the UK to negotiate a deal with the US.

Prof Stadler said: “We can expect substantial investment in US infrastructure, but this is not likely to benefit UK companies as contracts are likely to go to US companies.”

According to Prof Stadler, UK companies have two options - they can reduce the size of their US business or set up subsidiaries in the US. Both of these options will take time and money.

Prof Stadler added: “Another effect for UK businesses is that it could be more difficult to get work permits in the US for UK business people.”

Calum Bennie, an analyst from Scottish Friendly, takes a sceptical view of Trump’s boasts that he will make America great again.

Mr Bennie said: “In fact his protectionism is de-stabilising and, while there may be a short-term feel good factor among those Americans who voted for him, his policies seem more likely to make many Americans poorer overall.

“A combination of lower incomes and economic uncertainty is not good news for the American economy and, by extension, investors.

“As the old adage goes, when America sneezes the world gets a cold, and investors need to keep their nerve while volatility plays out and a new normal starts to emerge.”

David Battersby, an investment manager at Leeds-based Progeny Asset Management, believes the US faces a potential recession if Trump breaks up free trade agreements.

At this stage, nobody know how many of Trump’s election promises, such has his pledge to build a wall on the southern border with Mexico, will become reality.

But if he fails to deliver the giant wall a lot of his supporters will feel betrayed, and he will face a backlash.

The former reality TV star may struggle to cope with the compromises of political life.

For the good of the planet, he must see sense and embrace free trade. We cannot stomach a dark age of protectionism.

Trump spoke of treating other nations fairly in his relatively calm and measured speech yesterday.

Let’s hope this is the authentic voice of his presidency.