The US election may be over, but the uncertainty is not – and although it seems reasonably clear that Joe Biden will take the White House on January 20, 2021, legal challenges from Donald Trump across several states may throw more chaos on to an already volatile global environment, even though he has accepted that a formal transition must now begin.
ICNZ chief executive Tim Grafton says that the leadership of the United States will always be of interest to New Zealand, particularly when it comes to its economic ties with key players around the globe. In ICNZ’s latest Speaker Series 2020, he discussed what the next several months will bring with Alavan Business Advisory director Alastair Newton, who believes the US is almost certainly in for a rough ride.
“Looking at the largest economy in the world and what its leadership brings is a fascinating discussion,” Grafton commented.
“We are at the end of a Trump term in office, and on the eve of a Biden presidency. There’s been a considerable amount of analysis about the US election, so it’s interesting to be able to reflect on what’s happening in the process between now and inauguration day.
“The collective wisdom seems to be that we’re heading for a Biden presidency, though some risks have still been identified that will need to be navigated.”
Commenting on the impact of COVID-19 on the US election, Alastair Newton said that the chaotic handling of the virus may well have cost Trump a second term. He said it is “not conceivable” that Joe Biden will not be inaugurated in January – however, he says Trump’s lawsuits across several states will turn it into a bumpy road.
“I think we would have found that Donald Trump would have won a second term, had it not been for COVID-19,” Newton said.
“In the handling of COVID-19, the Trump administration has not exactly enamoured the world with a sense that it’s been competently managed. But more importantly, the impact of COVID-19 on the US economy has been tough to put it mildly, and we’re far from out of that particular wood yet.”
“If you look at exit polls from the election, the economy was the biggest single factor in determining votes – around 35% - whereas COVID-19 was just under 20%,” he explained.
“That gives you a very clear indication of how important COVID-19 and its impact on the economy has been in this election, and how much it contributed to what almost certainly looks like the defeat of Donald Trump.
“It is not conceivable that there is no inauguration on January 20, because that is constitutionally bound. The rest is custom rather than law, and that’s potentially quite disruptive – we’ve already seen a lot of lawsuits filed, and a whole lot more have gone in now.”
Although most of Trump’s lawsuits have so far been thrown out, Newton says this is far from the end of the story. Worryingly, the US Department of Justice is looking to investigate claims of electoral fraud, the outcome of which Newton says is difficult to predict.
“My personal view is there is a very high probability that Joe Biden will indeed be sworn in on January 20, 2021, but I think we’ll be in for a bumpy road between now and then,” he said.
“This all adds to a sense of uncertainty which isn’t impacting financial markets at the moment, but who knows what could yet get thrown up in a year which has already been notable for big and unpleasant surprises.”
When it comes to New Zealand’s place on the world stage, Newton says its best strategy is to do what it has done for the past several years – not get involved in global tensions, and maintain its most important economic ties.
“The advice I would offer New Zealand is to try to steer the steady course which it has been steering for the past several years now,” Newton said.
“I don’t think Biden will be quite as dramatic as Trump has been, and we won’t see the Trump approach of ‘do as I tell you or else’ with close allies. I think New Zealand can afford to sit back a bit, watch things unfold, and look to retain close economic ties without necessarily triggering any trip-lines.”