Photo via Flickr/Gage Skidmore
There’s been plenty of emotional reaction to Donald Trump’s surprising victory in this year’s presidential race. While President Obama and Hillary Clinton stress reconciliation, thousands of citizens have engaged in emotional protests and others, some ostensibly supportive of the president-elect and other opposed, have engaged in incidents of destructive behavior.
But how will Trump’s presidency impact the US economy? And will the impact affect travel to Caribbean destinations dependent on US visitors?
Most economists agree the global economy has stabilized over the past two years, with the US among several major nations showing slow but sustained gross domestic product (GDP) growth. Travel and tourism stakeholders will be looking for these trends to continue under a Trump presidency.
Caribbean Hotel and Tourism Association (CHTA) leaders last week congratulated the president-elect, framing their message in purely economic terms. “Tourism is a common thread which binds the Caribbean and the United States, generating employment, entrepreneurial activity and foreign exchange for our region while contributing significantly to US exports and economic activity," said CHTA President Karolin Troubetzkoy and CEO Frank Comito in a joint communiqué toTrump.
The CHTA leaders described tourism as “the world's predominant and fastest growth industry, contributing 9.8 percent to global GDP and one in 11 jobs,” according to World Travel and Tourism Council data. They noted that tourism’s impact on Caribbean destinations is even greater, accounting for 13.3 percent of employment “and a total impact on GDP as high as 90 percent for some countries.”
Of course, Trump’s specific policies have yet to materialize, but inferences can be drawn from his campaign statements, according to Tim Cooper, a global economic strategist at U.K.-based BMI Research.
Most important to understanding the potential economic impact of a Trump presidency is recognizing the nature of his victory, Cooper said. “This wasn’t an election about specific policies per se. In fact they were sort of on the sidelines for both candidates during the campaign,” he said. “We would instead emphasize that this is about a rejection of the status quo in Washington and in US politics.”
As such, Trump will likely not adhere to traditional Republic economic orthodoxy, Cooper says. “While under normal circumstances a Republican president in Congress would be likely to introduce a policy mix that has things like fiscal consolidation, free trade, tax cuts and reduced regulation, it is more or less impossible to expect US government policy to be conducted as usual following this result.”
Although “Trump’s policy platform is not significantly clearer now than when he began campaigning last year, at least in terms of specifics,” according to Cooper, he expects Trump will advance “a change in policies to encourage inflation and economic growth,” which Cooper says “has a lot more to do with spending than raising revenue.”
In fact, Cooper foresees Trump implementing “basically a mix of protectionism, policies to increase workers’ disposable income, which can range from a higher minimum wage to tax cuts and other policies, while at the same time maintaining some populist policies including entitlement spending.” Increased government spending and a growing US economy would unquestionably augur well for expanded tourism to the Caribbean and other leisure travel destinations.
Conversely, some of the president-elect’s statements regarding the US relationship with the wider global community may have an opposite impact. The Trump message includes a “backlash against internationalism,” said Cooper.
Under Trump, “The US will focus much more on its core interests rather than those of allies” with “more introverted foreign policy” and reduced emphasis on “spreading US values abroad. [Trump’s] platform theme of globalization slowing down is certainly going to continue,” he said.
Will that world view extend to US travelers, resulting in a new hesitancy to travel to international destinations including the Caribbean? Trump’s presidency may certainly have profound consequences for Cuba, recently the region’s hottest destination. The Obama administration has spent two years normalizing relations between the countries, launching a tourism boom. Trump has threatened to repeal Obama’s liberalization policies unless President Raul Castro agrees to more political freedoms.
Likewise, tourism-dependent Caribbean destinations would certainly suffer significantly should Trump’s policies result in an economic downturn. For now, Caribbean government and tourism leaders are pledging their cooperation to ensure the new administration’s success.
“I think our approach has to be our usual one, one of open dialogue and engagement,” said Mark Brantley, foreign affairs minister for St. Kitts and Nevis in a CaribbeanNewsNow.com report. “It is no secret that the Caribbean has done well with Republican administrations so we must continue to engage. America is a critical ally to the entire region and I think that we have to engage openly.”