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USA, World and Georgia Waiting for Trump’s Decisions

In pre-election period nobody expected Donald Trump would carry the presidential elections. Even in December 2015 the Bloomberg appraised probability of Trump’s victory as Black Swan (negative event that is hard to forecast). All these evaluations and expectations remain in the past now.

Donald Trump has become the US President. Political experts and economists unanimously agree that his policy will affect the US and global economies.  Foreign media agencies report that in autumn 2016 US electors were complaining about economic problems most of all, because Barack Obama could not return living conditions of ordinary US citizens to the 2008 pre-crisis period indicators, while in his economic program Donald Trump was persuading electors that their economic conditions would be improved.

Trump plans to abolish inheritance tax, introduce tax preferences for children growth, reduce tax burden on physical bodies to 33% from 39.6%. Trump plans to lower tax burden on business from 35% to 15%. He thinks these measures will assist the USA to compete with Ireland and Britain, where a part of major American companies have departed for.

Key direction of Trump’s economic policy is to create new job places. Under ruling of Barack Obama, unemployment level increased in the USA and 14 million citizens lost jobs in the USA, Donald Trump said. The billionaire is sure that he will change the situation and sets the struggle  against illegal migrants as one of  mechanisms to achieve this goal. Trump has pledged to expel 11 million illegal immigrants from the country. Moreover, cancellation of various trade-economic agreements, first of all, with China and Mexico, will create new job places, he supposes and expects these measures to return withdrawn factories  to the USA again.

The Caucasus Business Week (CBW) was interested in how the US economic policy may change under the New President and how this policy may be reflected on Georgia?

On the US president election day, the USD exchange rate fell and stock market indices started declining. This fact brought expectations that president-elect Trump would revise both US and global economic realities.

As known, the USA is one of the major trade partners of Georgia with 5-6% ratio in total trade turnover. Various programs and infrastructural projects are financed thanks to American money, grants and credits. According to unspecified information, about 100 000 Georgian immigrants live in the USA, including a part of them have the status of an illegal immigrant. Therefore, if Donald Trump keeps the pre-election promises, consequences may touch even Georgia.

Irakli Berdzenadze, the Personal Banker executive director

Irakli Berdzenadze, the Personal Banker executive director, explains that Trump’s victory signifies more economic stimulus, less interference in international relations and less «American Democratic» processes in countries. Idle and dependent countries like Georgia will realize that they should earn their living themselves, he said. ‘And Trump is an additional major and good effect for stock exchange», Berdzenadze noted.

Trump’s presidency will not make real influence on Georgian economy. First of all, Georgia and USA have tight political relations, but not economic. “The USA has made much contribution to economic recovery of Georgia. Therefore, Trump’s plans to cut external assistance may create certain risks to Georgia. What should Georgia expect from Trump’s presidency?

In reality, we could not receive even Trump Tower and consequently, we should not expect something special in this case either. I hope  the current assistance will not decrease, I mean grants. American do not like radical changes. Therefore, we expect current trade relations between two countries to develop dynamically”, Berdzenadze noted.

Rati Abuladze, Initiative Group of Scientists, doctor of economics, professor

Doctor of economics, professor Rati Abuladze stated that in the USA Trump’s victory in the US presidential elections has given birth to new political epoch. Trump’s victory changes political space and makes influence on old policy, political systems run out of resources, global economic policy and trade relations. New President of USA Donald Trump considers the USA prosperity as the best mechanism in tackling global problems with focus on national interests and correct economic trajectory, Abuladze said.

«It is indisputable that Trump’s presidency will change global political outlines. At the same time, his any step in Asia, Europe and Near East will bring essential economic effect. It is worth noting  Barack Obama has persuaded allies that Donald Trump  backs US strategic relations worldwide. As to specific risks spread by media agencies amid expectations of electing Donald Trump as a president, they come from fears of changes. But according to Obama’s words, the US President’s institute is more than any other person», Abuladze said.

Before his victory in elections, Donald Trump’s election platform was paying much attention to domestic economic interests,  revision of trade agreements. It was oriented on protection of international imports and other processes. But protectionism moods turned out not very positive and influence of its statements was assessed painfully, he said.  Trump intends to carry out general repairs of social-economic and political environment through rigid economic policy, Abuladze said. It is early to talk about deportation of illegal immigrants to. Surveys prove that the USA will have to take serious costs for deportation of immigrants. Today, there are 11.3 million immigrants in the USA. Averaged cost on deporting an illegal migrant is estimated by 10.070 USD (arrest, keeping in prison, legal proceedings, deportation).

Total costs will hit 114 billion USD. At the same time, Deportation program may last 20 years and costs range from 420 to 620 billion USD. As a result of deportation program, the US economy may shrink by 1.6 trillion USD (down 6% in 20 years; BBC.com).  Trump’s presidency will bring positive effect to Georgian economy in midterm and long-term perspectives, Abuladze noted.  “Trump’s political platform sets modern requirements for politics, old political establishment, trade-economic relations, visions and approaches of political experts. Similar approaches foster formation of new political environment, finding new markets, professionalizing some sectors of economy that, in whole, takes international competition to a higher level. As a result, Trump’s presidency and US political support will set a foundation of a new economic and political ecosystem. In whole, it will be good if Georgia takes into account lessons of US politics”, Abuladze said.

Gia Khukhashvili, Economic Expert

These processes are not expected to make decisive influence on Georgia, however, expected dividends from EU integration may seem less interesting, economic expert Gia Khukhashvili said. If the US market shows closing tendencies, this will be serious blow to Europe, tense USA-China relations that may provoke serious shocks in economic system of the past decades, he said.

“Over the past decades major soap bubbles were created in the USA, while real sector was moving to other countries. This tendency created problems with employment. Depressive regions appeared. Introduction of 45% tax on Chinese goods is one of the pre-election promises by Trump. Today, economy is globalized. Changes of such major market and redirection to national economy sector will revise global economic structure too. I would say one thing – all these tendencies will make less effect on our country compared to Europe. However, naturally, we should expect certain shocks”, Khukhashvili said.

Association of Young Financiers and Businessmen

Zurab Kukuladze, analyst for Association of Young Financiers and Businessmen (AYFB), noted that Georgia first should realize very well why the US society has elected Donald Trump. This result was motivated by economic factors, he said. «Trump’s economic policy signifies that the US community today worries about job places, because employment level is declining because of several key reasons, including migration is a basic one, as well as economic de-industrialization of the country (massive translocation of factories from USA to foreign countries).

Another direction in Trump’s policy makes focus on foreign trade restriction under pretext of US market protection. Foreign trade issues should be considered in this context. Both moments may  make influence on Georgia, and, to a certain degree, return Trump-preached tendencies in economic development trends», Kukuladze noted. Trump’s presidency will make two types of effect on Georgia, Kukuladze added. First, Georgian Authorities will start thinking of carrying out industrial policy. As to direct influence, this cannot be expressed by foreign trade restriction, Kukuladze noted. In this case Georgia’s future is unclear, because, according to Trump-announced policy, trade relations with the USA may change, but Georgia-USA trade relations are not large-scale and these changes cannot create problems to American production, Kukuladze pointed out. “I think Georgia-USA trade relations represent a subject of political discussions rather than something to bring any results to this or that party”, Kukuladze said.

Donald Trump –Road to White House

Donald Trump was born on June 14, 1946 in New York. He has graduated from NYC military academy private boarding school, where parents sent him  for his stubborn character.

In 1968 Trump obtained BA degree in economics at Business School of Pennsylvania University. Later, he started working for development company of his father Fred Trump. Donald Trump made his first success on development market after his project won tender for restoration of hotel Commodore (currently Grant Hyatt New York). In early 1990s Trump faced serious financial problems with covering credit that he had taken for constructing Taj Mahal casino. He managed to restructure debts by transmitting 49-50% of his assets to the creditor. In 1994-198 Trump also sold a part of his assets in Trump Shuttle airline and land plots in New York.  Besides real estate, Donald Trump is also interested in beauty salons (miss world, miss USA), sports (wrestling, olf and American football) and sales of vitamins (Trump Network). In 1982 the Forbes for the first time published the rating of US 400 richest persons and Trump’s assets were evaluated by 200 million USD. In 1988 Trump’s assets rose to 1 billion USD, while Trump himself appraised his assets by 3.7 billion USD.

Trump married three times. His first spouse was Czech ice-skater Ivana Zelchikova. He has three children from the first marriage. In 1993 he married model Marla Maples, who gave birth to daughter Tiffani. In 2005 Trump married  model Melania Knauss. Trump has one son from the third marriage.

In 1999 Donald Trump tried to become  a US president from Reforms Party, but he withdrew from election campaign because of personal reasons. On June 16, 2015 Trump officially announced that he would take part in the presidential election from Republican Party. Initially, he was not perceived seriously, but he proved the opposite and won inner party primaries.

Trump’s election campaign was accompanied by various scandals because of his anti-migration moods, anti-Islam expressions,  and so on.