It seemed pretty clear to me as I put fingers to keyboard this morning that this week’s Memo should probably talk about the impact of the forthcoming Trump presidency on the world’s biggest economy and largest diamond jewelry market. Stock exchanges and some currencies were volatile on Wednesday as the world woke up to reality, if you’ll pardon the pun so early on.
But as the day progressed, the markets calmed, likely helped by Trump sounding like a responsible statesman for the first time since he launched his bid for the White House too many months ago. And on Thursday, many markets bounced back. Some people believe that President Trump is going to be just great for the US economy and, therefore, jewelry sales. Others believe that the apocalypse is just around the corner.
As for the result itself, in the words of the mythical, fictional British Prime Minister Francis Urquhart: “I couldn’t possibly comment.” Not because I don’t want to, it’s just that nobody really knows what the effect will be on business looking ahead. In our world of the 24/7 news cycle where talking heads must fill in hours of airtime going over the same themes endlessly, this might sound a little odd, but wouldn’t it be better to wait and see what actually happens? How useful are the numerous predictions about what is likely to happen?
President-elect Trump says he has an economic plan. He clearly didn’t want to confuse voters by actually giving them, and the rest of the world – which actually has quite a large interest in what he may be planning – even the tiniest peek at it during the campaign.
With the Senate and House of Representatives in the hands of the Republicans as well, clearly President-elect Trump will have an easier time pushing through his eventual economic program. A wild guess comes up with the likelihood of tax cuts for many people who earn enough not to really have to worry about earning more, a reduction in corporate tax levels and a loosening of the regulatory framework for a range of sectors.
Maybe I, like many of you, am a little too long in the tooth to fall for politicians’ flamboyant promises and I don’t want to be cynical because, after all, we gotta give the guy a chance, but I don’t see how those policies are going to help raise the salaries and standard of living of the many blue-collar workers who voted for Mr Trump. Bringing back jobs and giving American workers hope is what he promised.
Trump appears to be against globalization and he doesn’t like trade agreements because they ship jobs abroad, he says. Somewhat ironic from a diamond and jewelry industry perspective. Imagine if the diamond industry were to say the same thing: polishing would not have moved to India and China and elsewhere in the Far East. And those countries, whose populations have seen a tremendous amount of the world’s wealth move to them due to the establishment of huge manufacturing sectors, would not have the financial means to buy diamond jewelry, meaning lower sales for diamond manufacturers and traders based in Israel, Belgium, New York and elsewhere in the West.
And can we imagine supporting a relaxation of regulation? The diamond industry is arguably the best example of one which self-polices itself. Stamping out conflict diamonds and money laundering, and working to create a more transparent business have been, and remain, at the top of the sector’s agenda.
Is globalization good or bad? I think it’s pretty clear that it is both. But the question is irrelevant because it is here and it affects just about everything we do and buy. Are polishing jobs going to return to Ramat Gan, Antwerp and New York? Obviously not. Do business sectors and economies have to adapt to change and create new niches? Yup. I’m sorry to end with a cliché, but it’s a sad reality, you can’t turn the clock back.
Needless to say, I’d be delighted to hear your views, and we will aim to publish them in IDEX Magazine. Send to: news@idexonline.com
