One of the major U.S. credit ratings agencies says the Trump administration represents a risk to international economic conditions and could alter global sovereign credit fundamentals.

The Fitch Ratings agency says risks have increased because U.S. policy predictability has diminished under Donald Trump, raising the prospects of unanticipated policy changes that could have global economic consequences.

The economic implications include the possibility of disruptions to trade relations, reduced capital flows and limits on migration and remittances, all of which could lead to heightened currency and financial market volatility.

But Fitch says parts of Trump’s agenda could be positive for growth. That includes the president’s promise to boost infrastructure investment, decrease regulations and cut taxes. Fitch says a lot will depend on whether those policies lead to bigger deficits or expand the U.S. debt.

All told, the balance of risks points toward a less benign outlook, given the administration’s abandonment of the Trans-Pacific Partnership and its desire to renegotiate established trade deals with Canada and Mexico. Much could still change, but Fitch says the aggressive tone from the White House is likely to make negotiations or compromise with other countries more difficult.

Countries most at risk from increased U.S. unpredictability are those with close economic ties that are now under scrutiny because of perceptions of unfair trade arrangements or exchange rate practices. They include Canada, China, Germany, Japan and Mexico.

Fitch says that, due to the size of the U.S. economy and its integration in the global supply chain, any actions Washington takes to limit trade in one country are bound to have effects on other countries.
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