
Commentary by Paul Schonenberg, Chairman & CEO
The November elections in the United States have given a significant mandate to President-elect Trump and his Republican colleagues to undertake significant changes in policies with potentially significant global as well as US impact.
At the same time, the US constitution is designed to moderate against radical change. While all of the US House of Representatives is elected every two years, only one third of the Senate is so elected, so a possibility of quick changes in the lower elected assembly is moderated by a six-year full election cycle in the upper elected Chamber. At the same time, The Electoral College is designed to balance power between the states and the national government and, at the same time, to moderate to ensure fair and equal influence for rural areas with small populations as compared to urban areas with bigger populations.
What happened?
In this election, Mr. Trump received a significant majority win in the electoral vote and a majority of the popular votes, the strongest mandate for a Republican Presidential candidate in many years. So, he has a strong personal mandate as the reelected 47th US President. Interestingly his majority vote reflects a change in voting behavior for certain key groups with increased support from Muslim and Jewish voters, young men, black men and urban women. In the last election four years ago which elected Mr. Biden, there were more registered Democratic party voters than Republican voters while in this election cycle, the number of registered Republicans exceeded the number of Democratic voters. In both elections 35% of voters were registered as independents, so it is fair to say that the independent voters significantly decided who would win the election.
At the same time, Mr. Trump and his allies, while in a strong position to change and enact changes to Government policy have relatively thin voting majorities in the House of Representatives and the Senate and can best govern if they can find common ground with the Democrats who have lost the Presidency and control of the Senate.
Why this shift in voting?
Going into the election, Mr. Trump was the underdog against a sitting President and a Democratic Senate with strong Democratic support from the largely liberal national media, an array of powerful lobbyists and with a Republican party not yet on his side.
Mr. Trump overcame his rivals in the Republican party to secure the Republican nomination by being a very strong and media-savvy candidate. He then crafted a campaign strategy fighting against the status quo which was focused on appealing to the working class in all demographics, which proved to be very successful.
In the first presidential debate against Mr. Biden, Mr. Trump came across as the strongest candidate and Mr. Biden appeared to be a candidate past his time and at risk of being incapable of serving as President. As a consequence, Mr. Biden withdrew from the race and Mrs. Harris was selected without a primary process.
As a candidate, Mrs. Harris did no press conferences and only a few tightly-managed interviews, while Mr. Trump talked with everyone about everthing.
Despite raising more money than Mr. Trump with a total of 1.2 billion USD, and having massive endorsements from movie stars, Mrs Harris appeared to mostly run a negative campaign against Mr. Trump with limited policy objectives.
It appears that the voters agreed with Mr. Trump that their circumstances had deteriorated during the Biden Presidency, that Mrs. Harris offered a continuation of the Biden policies. So, they voted for change and for putting “America First” under a strong leader.
It also appears that the majority of US voters disregarded the legal attacks against Mr. Trump believing that these attacks were largely politically motivated and constituted a weaponization of the legal system unfairly against him and his candidacy.
What are the likely major objectives of this new US government domestically?
- Significantly increase energy supplies via new domestic production to lower energy costs and thereby reduce costs for goods and services, lower inflation and enable working Americans to live within their incomes.
- Increase domestic manufacturing to provide working class jobs perhaps using tariffs as incentives for foreign manufacturers to move production to the USA.
- Eliminate unnecessary national government regulations. Review and simplify national government regulations and reporting. Reduce national Government employment and move government jobs around the country outside of the Washington DC area.
- Regain control of immigration and deport criminal illegal aliens.
What are the likely foreign policy objectives?
- Strengthen the US military but avoid being involved in wars.
- Strengthen NATO by encouraging European and Canadian countries to increase their participation so the NATO cost burden is more fairly shared.
- Shift to Jacksonian policy of focused engagement rather than trying to be the world policeman
- Ensure the US is respected, appreciated and treated fairly.
- Build and strengthen mutually beneficial alliances and relationships while, likewise taking actions which challenge and weaken global adversaries.
What is the impact on Luxembourg?
Bilateral Trade and investment between the US and Luxembourg is balanced and fair (as reported in the annual AmChams EU trade and investment report). US and Luxembourg have a strong bilateral supporting alliance and partnership. So, there should be no major or unmanageable impact. The US will expect Luxembourg to meet its NATO funding obligations, and the government has agreed to do this (hopefully by focusing in dual use investment that both funds NATO and have a positive business sector impact). Having the NATO Support and Procurement Agency (NSPA) in Luxembourg will help in this regards as will the IT and Space sectors.
Conclusion:
Clearly the USA, Luxembourg and the world will change as a result of the US elections. This need not cause problems for our Luxembourg business and governmental engagement with the US. In fact, it can well provide opportunities for us to further grow and flourish. Let’s seize these opportunities and use them wisely by being an even stronger partner and building an even stronger alliance and friendship between our two great countries who share such common ground and common objectives.