2016 was a stunning year from a political perspective with an array of events that shifted the landscape; however, it was election victory of Donald Trump in the US that sent the biggest shock-waves worldwide. On Friday, Trump was officially inaugurated as the 45th President of the United States and has been clear we can expect changes in White House foreign policy under his leadership; however, what does this mean for Peru? What impact will Trumpism have here?
It is expected that we will see the impacts of Trump’s presidency mostly in immigration, and the economy.
Immigration; there are around 449,000 Peruvians currently living in the United States and how they are treated will be of concern to us here in Peru – will Trump’s rhetoric make life harder for them? Will Trump’s tough stance on immigration make it difficult for them to stay and work? Could it even lead to many of them returning to Peru?
Trade Deals: Already, the new US President has hinted that he plans to pull out of the Trans Pacific Partnership, a trade agreement Peru and the US have signed along with twelve other countries. The TPP agreement would bring down trade barriers between the participating countries, however without US involvement it will likely collapse, and thus Peru will lose the opportunity to have easier access other signatory country’s markets .
Of course, the ending of TPP does not mean an end to Peru’s current free trade agreement with the US, signed in 2007. Although, Trump will likely want to review the deal as he seeks to get better deals for the US, so talks with the Peruvian government over revising the deal may occur sometime down the road. Exports: Central to Peru’s economy are commodity exports, such as copper. Since his election win in November the copper price surged, which of course is good news for Peru as profits are higher when the prices is higher. Fluctuation of the US Dollar exchange rate under Trump will also influence the Peruvian economy, as it is significantly dollarized and relies heavily on exports.
Another area of economics where Trump’s policies could affect Peru is his strategy towards China. So far, the new President has shown hostility towards Xi Jinping’s government, with some political commentators suggesting a trade war could arise. A trade war arising between the US and China would be bad for the global economy, and especially Peru, as the economy here relies greatly on Chinese spending: if there is a slowdown in the Chinese then Chinese investment into Peru and spending on Peruvian products will likely reduce.