THE FIRST 24 HOURS

Washington District Colombia has been abuzz with political activity on January 20, as President Trump was sworn into office as the most powerful man on the globe. Analysts across the globe have been on the lookout on what the Trump 2.0 means for policies in their different fields, both on a global and domestic landscape. Today, I will share my insights on implications for the domestic economy.

The opening spigot

 My analysis is heavily grounded on president Trump’s opening line to the inaugural speech. These couple of lines told it all before he could even begin unpacking the policy direction the US would take for the next four years. “The golden age of America begins …. And we will not allow ourselves to be taken advantage of …”. Essentially, it is America First and the world later, we should come to expect insular policy across the spectrum.

The inaugural speech

Gleaning through president Trump’s inauguration speech, I came up with these 13 striking points from his speech. Immigration, insular foreign policy including trade policy, energy (drill baby drill), indifference to climate change, bring back manufacturing jobs into the USA (MEGA), tariffs and foreign tax (establishment of the External Revenue Service), the Department of Government Efficiency (DOGE), redrawing the map of the world as we know it (Gulf of Mexico to Gulf of America and control over the Panama Canal) and space exploration will be accelerated, especially Elon Musk to get funding for his Mars Colony. Also, on the human rights front, we experienced a roll back of diversity rights and critical race theory discarded.  Lastly, the president spoke of peace on earth, and improving defence to protect America and gauging peace by the wars America does not have to fight.

The executive orders

We have seen the president sign his first executive orders, hitting the ground running, operationalising his inaugural speech. The first order of the day was an executive order on stricter controls on the borders, followed by an executive order pulling the US out of the climate accord, an executive order revoking the electronic vehicle mandate, also, an order directing all federal employees to combat inflation and loosened regulations on oil and gas mining. An order freezing new hires within the federal service and restoring a five-day work week for all federal employees. We also saw an executive order rolling back and protections for transgender people and terminating diversity, equity and inclusion programmes within the federal government. Lastly, we have seen an executive order begging the process to withdraw the US from the World Health Organisation. The first 24 hours also saw a roll back on all Biden’s executive orders and pardons for all January 6, 2020 ‘insurrectors’.

Implications

 The MEGA train will see a number of manufacturing jobs move back to the US. This will affect a number of economies, more especially those targeting the US market. Tariffs tend to divert trade from a low cost source into the product destination, since the tariff makes those commodities relatively expensive at their destination compared to those products produced within that economy. This will have negative impacts on our balance of payments since we export sugar and a couple of other products into the US market. Eswatini has been positing a positive trade balance over the past three years and these actions will eat into that positive region. Stricter immigration controls and mass deportation will likely contribute to a decline in remittances from undocumented emaSwati immigrants.

I also see a situation where the president will enforce trade reciprocity and AGOA will not be spared from all these actions, as president Trump attempts to lower the US’s trade deficit. We will likely return to that Rainbow Chicken saga experienced during Trump’s first term. We should note that during his first term, President Trump put a lot of money in the pockets of Americans but the world over, experienced some declines. The Lilangeni strengthened, post the inauguration as the markets mulled over what to expect, but exchange rate volatility is to be expected.

Energy and environment

Drill baby drill is one of the inflation reduction strategies that president Trump is exploring. This will likely result in favourable fuel prices in the medium-term as American oil and gas floods the market, resulting in overall increase in supply, resulting in a decline in the price of oil. The future markets are already adjusting to these sentiments, the price of Brent Crude Oil trading at US$79 at the start of today’s trading session. The prices are expected to dip even further as drill baby drill takes full effect. Global emissions on the other hand are expected to increase and the Global South will most likely not receive the much required climate change mitigation support that was promised.

Social expenditures

The diversity rights movement likely to be defunded and Eswatini should brace for increases in domestic health expenditures in anticipation of a cut in the WHO funding. Also, DOGE activities may seek to find efficiencies within the PERFA mandate, so we need to brace ourselves for domestic sustainability.

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