Markets Should Remember Campaigns Aren’t Government

Barack Obama made a point of reminding his opponents that elections have consequences. But economic history suggests that some of the most consequential decisions have more to do with underlying trends, the necessities of office, and crisis response, than what’s shouted in a campaign. Asia will need to bear this in mind when assessing the latest election outcome.

Policymakers in the region will also need to look beyond initial reactions. Donald Trump’s victory on Tuesday isn’t the end of globalization. His first term wasn’t, despite the escalation of tensions with China. The President-elect’s complaints about an overmighty dollar, a feature of his first White House stint, also require a dose of salt. He didn’t devalue the greenback and, while it was weaker when he left office in January 2021, the retreat was due to deep interest-rate cuts from the Federal Reserve to alleviate Covid. Trump egged the Fed on in that stimulus, notwithstanding his sharp criticism of the central bank a few years earlier. Circumstances warranted it.