US President, Trump can no longer support after the Midterm Elections on a double majority in Congress. What this means for his future economic policy? Answers from US Economist Dennis Snower.
Deutsche Welle: US President, Trump has been placed in the trade policy of confrontation and, by a decree of duties imposed on steel and aluminum-imports from Europe, but especially against the Chinese. Will be able to change the outcome of the election?
Dennis Snower: Trump will not be able to act without restriction. The Democrats can block, because they have the majority in the house of representatives. This does not necessarily mean that the US is becoming less protectionist. Because the Democrats have followed the Republicans in the trade policy so far, and therefore, in my opinion, is to be expected after any major liberalisation.
The Europeans and especially the Germans, fear that Trump could prove European cars with punitive tariffs. Will the new majority is now less likely?
Perhaps, but not necessarily. Trump has been announced so far is always implausible stuff, and then done. And therefore, I believe, is to take his threat seriously. The Democrats are internally need to decide in which direction you go. More inward directed or outward open. Both currents there are in the Democratic party and is currently divided.
Under the U.S.-punitive tariffs against European cars, especially German manufacturers such as BMW would have to suffer
Trump has put some countries under pressure to negotiate existing trade agreements, such as Mexico and Canada. Can he lead this course under the new Majority?
He can him lead. America now uses his Power to push other countries in the Close. And because America is an important trading partner for many countries, and you can also. It is not, of course, the Status of a world power, should also occur grading for the world economy. But Trump doesn’t seem to think much of this responsibility. And the Democrats, in their present mood seem to deal much more with himself and America, as the position of America in the outside world to attach much importance to it.
Rising national debt and economy boom “unheard of”
The deputies in the house of representatives to decide, Yes, last but not least, the American Federal budget, and thus taxes and other means, to further stimulate the economy. The US economy is currently growing very strongly. Will it stay that way?
This is not likely to remain so. The Democrats are preventing the economy in this way, mainly through tax cuts for businesses. You will also participate in the course, especially rich people are more favored than the poor. This means that there will be disagreement. But out of this disagreement can be a little close.
The U.S.-punitive tariffs against steel imports also manufacturers in the UK as it is here in Sheffield
Trump will not have it so easy, to make his model more. His model was not sustainable. Therefore, in the minds of investors, and I think also in the minds of the consumers, twofold: in the short term, the economy is booming, you have to take advantage of. But in the long run, this is simply not sustainable. It is outrageous that the state debt will rise in a time in which the economy is really on the Gas. This should not be and can not, in the long term.
Therefore, the medium will rise to longer – term Worries. The drop in the stock market that we have seen recently, you have perceived these Concerns. But I believe both: that Trump will not run in this way its policy. This means that the huge Worry about the long-term sustainability of the American economy are somewhat slimming. Nevertheless, the uncertainty remains very large.
Summary: Will President Trump now forced more moderate, or he makes the sound simply continue as before?
I am convinced that He will make in the sound. I don’t think he will change his policy. It will be easy to get to major conflicts and the Democrats and Republicans will accuse each other, nothing more. Therefore, the world should not expect, that America as the largest economic Power of order in the world economy.
The Interview was conducted by Andreas Becker.
The US Economist Dennis Snower is President of the Institute for world economy in Kiel.