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Fitch: Trump and His Polices Threaten Global Economic Stability

Fitch: Trump and His Polices Threaten Global Economic Stability

 (AP/Evan Vucci)

By    |   Saturday, 11 February 2017 09:09 AM

While President Donald Trump’s supporters may truly believe he will “Make America Great Again,” one of the world's major credit-rating agencies warns that his administration’s policies on trade and immigration threaten global economic stability.

Fitch Ratings, in a statement, also cautioned about the creditworthiness of sovereign debt.

"The Trump administration represents a risk to international economic conditions and global sovereign credit fundamentals," the agency said in a statement, according to CNBC.

"U.S. policy predictability has diminished, with established international communication channels and relationship norms being set aside and raising the prospect of sudden, unanticipated changes in U.S. policies with potential global implications," Fitch wrote.

"One interpretation of current events is that, after an early flurry of disruptive change to establish a fundamental reorientation of policy direction and intent, the administration will settle in, embracing a consistent business- and trade-friendly framework that leverages these aspects of its economic program, with favorable international spill-overs," Fitch's analysts said.

“The primary risks to sovereign credits include the possibility of disruptive changes to trade relations, diminished international capital flows, limits on migration that affect remittances and confrontational exchanges between policymakers that contribute to heightened or prolonged currency and other financial market volatility," Barron’s reported Fitch as saying.

"The materialization of these risks would provide an unfavorable backdrop for economic growth, putting pressure on public finances that may have rating implications for some sovereigns,” Barron’s reported Fitch as saying.

Fitch does not mention the U.S. specifically being subject to a reduced rating, but listed several of its trading partners that could take a hit should negative conditions emerge from Trump's saber-rattling on international trade agreements and immigration flows, CNBC reported.

Fitch says some of Trump’s plans could be positive for growth — including investing infrastructure, decreasing regulations and reforming taxes — “assuming cuts don’t lead to proportionate increases in the government deficit and debt.” They express some hope that “after an early flurry of disruptive change” the administration will “settle in” and become more consistent, Barron’s reported.

However, that’s not where they think things are headed, Barron’s reported.

“In Fitch’s view, the present balance of risks points toward a less benign global outcome. The Administration has abandoned the Trans-Pacific Partnership, confirmed a pending renegotiation of the North American Free Trade Agreement, rebuked US companies that invest abroad, while threatening financial penalties for companies that do so, and accused a number of countries of manipulating exchange rates to the US’s disadvantage… A lot can change, but the aggressive tone of some Administration rhetoric does not portend an easy period of negotiation ahead, nor does it suggest there is much scope for compromise.”

And while Trump's first few weeks in office have been controversial and volatile, it's all to be expected from such a personality. For sure, Trump will be a demanding leader who applies the best of his negotiating skills to push for U.S. growth, bestselling author David Horowitz told TheStreet.com.

Trump won’t be an ideological purist like Republicans who support free trade but don't fight for fair trade, Horowitz said.

“If you just say, ‘well we're for free trade and we're not going to look at the deals that we make’ -- that's not a good idea,” he said. “We've had an anti-business president now for eight years who doesn't take a hard-nosed attitude towards these deals. Trump is going to get better deals for us, which is still free trade.”

Horowitz's new book, "The Big Agenda: President Trump's Plan to Save America," reveals Trump's "first 100 days strategy" to roll back Obama's legislative and executive record.

Horowitz's new book is the first book about the Trump presidency and has soared to the top of the Amazon bestseller charts, becoming the No.1-selling book on the web. Trump will also lead the way in making infrastructure spending to boost the U.S. economy, Horowitz said.

“If the economy grows as it will under Trump, there's going to be a lot more money to spend,” he said.

"Big Agenda: President Trump's Plan to Save America" is available at bookstores everywhere – or get your copy on Amazon – Click Here Now

(Newsmax wires services the Associated Press, Bloomberg and Reuters contributed to this report).

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While President Donald Trump's supporters may truly believe he will "Make America Great Again," one of the world's major credit-rating agencies warns that his administration's policies on trade and immigration threaten global economic stability.
fitch, trump, risk, global economy
Saturday, 11 February 2017 09:09 AM
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