Even those who expected a Donald J Trump victory didn’t expect anywhere as massive a margin—he won 276 electoral votes versus 218 for Hillary Clinton—but, as the candidate said during the campaign, it was Brexit plus, plus, plus with even Democratic strongholds coming out in his favour. Like Brexit, the US elections were a vote for bringing back the country’s perceived glory, it was a vote by those whom economic growth had passed over for several decades. As a recent McKinsey report pointed out, between 2005 and 2014, real incomes in advanced economies were either flat or fell for 65-70% of the population, while they rose for all but 2% of the population in these countries in the 1993-2005 period. Though Trump didn’t repeat the populist and anti-immigrant election rhetoric during his brief post-victory speech, and instead spoke of the need for all Americans to pull together in reviving the country, the Brexit-Trump well of discontent has been a big driver in the world downing its shutters for the past few years. Global trade volume of goods and services, for instance, has grown merely 3.1% since 2012 which is around half the growth of the previous three decades— WTO expects the volume of goods trade to slow down further to 1.7% in 2016, the slowest since the financial crisis. While global trade rose twice as fast as GDP in the 1990s, it is barely keeping pace today. According to Crisil, while import-weighted average tariffs declined almost 1% every year between 1985 and 1995, the pace of decline slowed significantly since 2012.
Whether Trump will be good or bad for India remains to be seen, but certainly investors in IT stocks weren’t taking any chances—shares of TCS fell 4.9% on close, Infoys 2.7%, Wipro 1.3% and HCL Tech 2.8%; like the post-Brexit-vote government in the UK, the markets are expecting a more isolationist visa policy in the US. Indeed, as elections come up in Europe, it is safe to expect mainline politicians to take more protectionist measures. While that means India should bank less on exports as an engine of growth, as a recent Crisil report pointed out, the reason for the continuous decline in India’s exports goes beyond a slowing global trade environment since others like Bangladesh, Vietnam and even China have seen their share of global exports rising in recent years.