U.S Civil Unrest Shocks the World, as Trump Looks to Dismantle the Foundations of Democracy

The Promise

Back in 2016, Donald Trump’s victory surprised the world. The polls had Hillary Clinton out in front and the U.S was set for 4 more years of Democrats in office.

President Obama had paved the way for economic prosperity. With the support of now President-Elect Joe Biden, the Obama administration had navigated the U.S out of the Global Financial Crisis.

While there had been many sceptics over Trump’s ability to run the U.S, optimism of a red-tape free 4-years favoring economic growth supported riskier assets.

Throughout Trump’s campaign and in the early days of his presidency, there was plenty of talk of making America Great Again. The U.S President had planned to reunite the U.S.

Fast forward four years and the world is in shock. This time around, however, the shock is for all of the wrong reasons.

Capitol Hill and Democracy

On Wednesday, protesters stormed Capitol Hill in a bid to reverse the U.S Presidential Election outcome from November.

This was not a peaceful protest that delayed the certification of Joe Biden as the President of the United States.

One woman reportedly died amidst the chaos, with law enforcement having to lockdown Capitol Hill.

Once considered the bastion of democracy and capitalism, the United States appeared to be in a time warp.

Worse yet, dire labor market conditions and the continued rise in new COVID-19 cases have left people helpless.

With nothing to lose and a U.S President goading supporters into action, things could have been far worse.

Many who voted for U.S President Trump back in 2016 and this time around will question the logic behind the vote.

At no point has Trump accepted the voice of the American people. Instead, he has falsely claimed fraud.

It is almost ironic that the very same claims had been laid out against Trump back in 2016.

Either way, it is time for the U.S President to leave and to leave quietly.

Leaving Quietly?

Leaving quietly does not appear to be on the cards, however, with yesterday’s events stemming from Trump’s attempts to break down the democratic process.

Even Twitter and Facebook have reportedly had to block Trump.

Unfortunately, it’s too little too late for U.S democracy, with pro-Trump protestors reflective of the “Trump effect” over 4-years.

Looking back over Trump’s presidency, a marked shift in U.S foreign policy should have been the warning sign.

Canoodling with the likes of Vladimir Putin and Kim Jong-un, while putting world peace at risk by withdrawing from the Iran Nuclear Agreement. It was a questionable start that left world leaders in limbo. Few wanted to upset the applecart so early into the U.S Presidency.

An extended trade war with China that resulted in a dubious phase 1 trade agreement was also a question mark.

And, after having survived and impeachment scare, Trump mishandled the COVID-19 pandemic.

U.S unemployment, an economic meltdown, and 369,990 COVID-19 related deaths are among Trump’s low points.

Wednesday’s incitement of violence that ultimately led to action from social media sites was a culmination of 4-years of Trump messaging.

International Horror

It’s hardly surprising that world leaders responded in horror to the scenes broadcasted from Capitol Hill.

Whether this puts the U.S on a weaker footing on the international stage remains to be seen. In Joe Biden’s favor is a lifelong career in U.S politics and his two terms as Obama’s running mate.

Addressing the social and civil unrest and restoring America’s image will be a must for the Biden administration.

A continued rise in tension and more unrest over the next 4-years would distract the administration from delivering on campaign pledges.

Such an eventually would be a disaster for a nation that needs to restore diplomatic ties not to mention reunite a nation.

Failure to achieve both would further remove the U.S from the international stage. With China taking more control of its future, many will be looking for Biden to turn it around.

Getting through the next 2-weeks and Inauguration Day will now be key. Following yesterday’s scenes, there is certainly cause for concern, with more civil unrest plausible.

Policy and Market Risk

For the global financial markets, the hope of more U.S stimulus has fueled demand for riskier assets. A distracted administration grappling with domestic unrest would be an issue.

The good news for now is that the Democrats have control of both houses and don’t need Republican votes to push policy.

The bad news, however, is that it may take more than 4-years to repair the damage.

There are likely to be a number of nations that will look to take advantage of America’s apparent weakness. This will need to be another area to monitor in the weeks and months ahead.

At the time of writing, the U.S Dollar Spot Index was down by 0.57% to 89.422 for the current week. An escalation from yesterday’s protests would likely add further pressure on the Greenback near-term.