Why could a Trump win spell bad news for UK & Europe but good news for Asia & Shipping?

“A real businessman or entrepreneur has no enemies. Once he understands this, the sky’s the limit.”

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And this is the reason why Donald Trump as the President of the United States is not bad news for Asia but very bad news for UK & Europe.

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At the core, President Trump is a businessman and will always remain so. And more importantly, as his previous term showed, he will act like one in the White House.

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Past is gone, Future is not there, all that is Present

There is one more key aspect that you need to understand – Trump does not really have any connection with history or historical ties that the United States has either formed or enjoyed. Interestingly, Trump does not really care much about the future either. He lives for the term that he has come in for, neither caring for America or the Republican Party or, not surprisingly, the rest of the world, once he finishes his four years. In his last term, he nearly dismantled NATO’s collaboration with the United States, took the USA out of the Paris Accord on Climate Change, and tried to buy over Greenland! Historical ties and alliances mean nothing to him, and this will hurt UK & Europe more than Asia. With Asia, the role of the USA has been a trade partner, a customer and sometimes a well wisher and supporter. Asia may actually benefit from the “short-term” thinking of Trump.

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What can you do for me?

The first rule of any business deal is that both parties must have something to contribute. Make no mistake, Trump will put America's interests front and centre but that does not necessarily mean less trade. He will look for Asia, especially China, to create a level playing field for America and at the same time, expect Asia to sell more into the USA as the economies of scale will make Asian imports viable. In his last term, the tariffs on Chinese goods simply increased the imported price and the trade deficit with China actually went up, which means the trade into the US from Asia was not negatively impacted, at least in terms of volume. On top of that, Asia also has something to offer to Trump and the USA – a market for US goods & services. With two of the most populous countries in the world in Asia, Trump cannot afford to ignore that market opportunity. On the other hand, Europe has a declining population, domestic immigration challenges, and very rigid policies & thinking on issues like Climate Change, which are at odds with Trump’s thinking. Trump has already accused the UK's Labour party of campaigning for Kamala Harris. Meeting of minds is essential for a contract. Asian minds are more likely to meet Trump’s rather than European ones.

Battling the wars inside & outside

Europe has another key challenge in the composition of the European Union itself. Tariffs on Chinese Electric Vehicles is a good example. Countries like Spain have openly opposed the idea of tariffs on Chinese goods. Countries like France have opposed the strict emission rules imposed on automakers. Internal dissent is something that can unravel the European model. Brexit wounds are still fresh in their minds. Further, they are now facing a huge challenge with the Russian-Ukrainian conflict, which endangers their energy & physical security. In short, Europe needs the US much more than the USA needs Europe. With a weaker negotiating position, Europe will definitely lose out.

Asia, on the other hand, has sufficient diversity and intra-Asia trade is healthy and growing. India and China, the two power blocs, just made up and partially solved their border issue at the recent BRICS summit and expanded the alliance, showing off their strength. With no real conflicts in their backyard and successful trade blocs like BRICS+ and ASEAN, they are in a powerful negotiating position.

Let the Trade flow, just like water

With clear Trump policies of greater Fossil Fuel production in the USA, engaging (in a good or bad way) all the trade partners to renegotiate trade deals, the trade flows will be dynamic and volatile. Coal & Oil exports from the USA to Asia will pick up for sure – the key question is which sources will they displace? Similarly, with tycoons like Elon Musk in tow, investments across the USA and Asia will speed up. While a lot of rhetoric exists in terms of huge tariffs that Trump threatens to put through, it may well be a lever to negotiate with Asia, especially China, and achieve a bit of “give and take”. Don’t forget that Asian countries still hold the majority of US Treasuries. Businesswise, it does not make sense to piss off your biggest investors. Europe is not even in the picture and thus may get the lowest priority from Trump and his policies.

Once again, Shipping is in for a volatile time but it may not be all bad news. If Asia & USA work out “a deal”, that may well mean longer ton-miles and a two-way traffic, which is pretty bullish. The loss of US-Europe goodwill means sacrificing smaller sailing times in exchange for longer ones.