Anticipating the Impact of a Trump Presidency in 2025
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SIMON BROWN: I’m currently in conversation with Bastian Teichgreeber, Chief Investment Officer at Prescient Investment Management. Thank you for joining me, Bastian. With president-elect Trump set to be sworn in next January 20th, many are pondering how his administration will influence global trade policies. He has certainly made headlines with his talk of tariffs, but do we really have a clear idea of what to expect from President Trump when he takes office?
BASTIAN TEICHGREEBER: Thanks for having me, Simon, and good morning. Indeed, there’s been considerable discussion around tariffs. There’s a lot of concern, especially after Trump’s broad tariff threats against various countries, which could significantly impact global trade, particularly with Brics nations, and that affects us in South Africa.
That said, we need to tread carefully. He is known for being transactional, and he recognizes that tariffs can hinder growth, impacting both foreign countries and Americans alike. Thus, it remains uncertain if he will implement all the tariff policies he has promised.
SIMON BROWN: You make a valid point. When he previously threatened Mexico and Canada, it seemed more like a negotiation tactic than a genuine intention to impose a 25% tariff. His transactional approach appears to be evident, as some experts in China suggest they find Trump’s nature manageable.
BASTIAN TEICHGREEBER: Absolutely. Historically, we have indicated that Trump’s presidency would bring more uncertainty compared to Biden’s potential leadership. However, I’m not entirely sure that’s the case. Trump is indeed transactional and strategic; he genuinely wants what’s best for the American people, which is understandable.
For us in South Africa, the best course of action is to align with his policies. Supporting an independent Brics currency or breaking away from the dollar could prove futile since he will continue to leverage the strength of the dollar and its status as the global reserve currency.
SIMON BROWN: Isn’t there a contradiction in that Trump advocates for a strong dollar, yet a weaker dollar could potentially benefit the U.S.?
BASTIAN TEICHGREEBER: Yes, in the long term, a weaker dollar might be advantageous, but generally, Trump prefers a strong dollar. Moreover, the U.S. economy is less reliant on exports now; it’s primarily consumer-driven, which allows them to manage a strong dollar. So that’s the current trajectory.
The policies he is likely to enact, including tariffs and fiscal expansion, should bolster the dollar, which has already shown signs of strengthening—an indicator that Trump’s policies might indeed support the dollar’s resilience.
SIMON BROWN: So, is it as straightforward as a stronger dollar due to Trump’s policies automatically leading to a weaker rand, especially considering much of this is already anticipated?
BASTIAN TEICHGREEBER: It’s not that simple, to be candid. Our South African economy is heavily linked to global growth. Typically, our currency performs well when the global economy is thriving. Many of Trump’s policies could stimulate growth.
If we take into account his efforts to deregulate U.S. businesses and cut taxes to boost the consumer economy, that could enhance global growth prospects which, in turn, may benefit the rand as a high beta currency.
Thus, it’s possible for both a stronger dollar and a stronger rand against other currencies.
SIMON BROWN: One last point—geopolitical tensions remain a significant concern, with ongoing issues in Ukraine, Syria, and the Middle East. Investors, particularly in Europe, are certainly watching closely.
BASTIAN TEICHGREEBER: Definitely. I agree that geopolitical tensions are likely to pose significant risks moving into 2025. It seems that uncertainty is an enduring theme, particularly with the situation in Ukraine showing little signs of de-escalation. That’s a troubling reality.
While Trump has made grand promises regarding conflict resolution there, it’s uncertain what will transpire, but we must keep an eye on these tensions as they continue to rise.
SIMON BROWN: You’ve made an insightful point. Uncertainty is indeed a constant factor, and unfortunately, it looks like the situation in Ukraine will persist for some time.
Thank you for your time, Bastian Teichgreeber, Chief Investment Officer at Prescient Investment Management. I appreciate the early engagement.
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