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November 6, 2024
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A Trump victory would affect trade

A Trump victory would affect trade

Peru is a economy open that depends on what may happen with its main trading partners such as China and the United States.

LOOK: Oil price rises on election day in the US

In these close elections, the effects on the Peruvian economy will depend on who is the new president of the United States and the variables that are analyzed.

Several economists have agreed that the scenario for the world economy in the event that Kamala Harris reaches the presidential seat is that there are no significant changes in United States policy that could affect the economic order.

In contrast, if Donald Trump becomes president, the scenario is not so favorable.

Transmission channels

Among the main transmission channels of a possible Trump election are the financial and trade spheres.

Elmer Cuba, partner at Macroconsult, stated that, in the financial channel, Trump’s policies of increasing spending could lead to an increase in the fiscal deficit, thus inflation.

Higher inflation would lead the United States Federal Reserve (its central bank) to raise the monetary policy interest rate, resulting in a higher financial cost, which could affect our country in the short term.

This situation strengthens the dollar and, therefore, weakens all currencies in the region.

However, the financial impact is not as relevant as what could be generated in the commercial sector, according to Cuba.

“There may be some fall (in the margin) of copper, a little more in the exchange rate, and higher fiscal costs (for the US, not necessarily for Peru),” indicated the economist.

Commercial channel

According to Cuba, the trade channel is the most dangerous, considering the background of the trade war that Trump unleashed against China when he was president of the United States.

And the impact would not be so important for China, but for trading partners like Peru. This is because Trump has promised protectionist measures such as raising tariffs to protect his industry.

Cuba remembers that the US has always been the leader in world production, therefore, a risk for Peru is that, by standing out as the main supplier of agro-industrial products, it could put up barriers to trade.

Data

The Banco de Crédito (BCP) estimates that the exchange rate would close this year at around S/3.75 with risks of appreciation in 2025.

The bank also expects the BCR to cut its reference rate to 4.25% in 2025.

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