Trumpismo and the commodities wobble

The pundits would have done well to visit my dentist in Chile before they misread the jolting outcome of the US election. Outside of Mexico, Latin America’s traditional elites love Donald Trump. And so apparently do many of their voting relations in the US.

From the dentist chair yesterday, all I could see were his eyes twinkling from above his mask while he sought to reassure me about a Trump presidency. In muffled breath, he decried unbridled immigration and glowingly alluded to how Augusto Pinochet saved Chile from the ravages of the left — a common narrative here, and not just among elites.

From this local perspective, Trump is a savior. A bulwark against rampant crime and socially liberal policies that deeply offend conservative Latins. And finally someone with cojones to stand up to Nicolas Maduro in Venezuela! Trump’s promise of law and order, machismo, laissez faire economic policies — it doesn’t get better than that for the region’s business class. Never mind Mexico, it’s a nice place to spend a vacation. 

It was hard for me to respond while the dentist jabbed at my teeth. But I reflected: ‘So, Latin America is not a monolith of political preference. No surprise there.’

But what might take Trump’s local admirers by surprise is the extent of future volatility in commodity markets. Opec aspirations aside, oil in particular is in for a rocky ride. It will be pressured down by excess supply and the president-elect’s vow to expand drillable US acreage and dismantle environmental regulations, but also vulnerable to spikes if he follows through on scrapping the Iran nuclear deal or billing Saudi Arabia for security. Trump’s infrastructure pledge has helped to drive up prices for copper and other base metals, but persistent oversupply could swiftly drag them back down.

Such wild fluctuations will be tough on Latin America’s commodity-dependent economies, already battered by the sharp downturn since 2014. So will uncertainty over future US interest rates and the destiny of international trade agreements. We just don’t know how Trump will translate his campaign rhetoric into reality for much of the region that still looks to Washington for policy cues.

All I know is I have no cavities.

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