In a moment of historic consequence for American democracy, Republican Donald Trump emerged victorious in the 2024 United States Presidential elections. This will see him return to the White House come January 20, 2025. It has indeed been a remarkable comeback for the former President, who through this process has overcome a criminal conviction, indictments, apparent assassination attempts, and persistent accusations of authoritarianism on his path to re-election.
By doing so, he has also avenged his loss to President Joe Biden four years ago. Trump has secured the Presidency and has also managed to take control of the Senate and will possibly later on, also control the House of Representatives.
American voters have returned Donald Trump to the White House for another four years after the latest U.S. Presidential election. Geo-strategic analysts have been busy for the last few days trying to fathom what might emerge within the matrix of policy formulation within the United States. All dimensions are being carefully considered.
Analyst Paul Poast has interestingly remarked, "most of what Trump has said about foreign policy-and, to be clear, he has offered little in terms of details-has sounded a lot like his first term. It could be that Trump is simply out of new ideas. However, he might also truly believe that what he did the first time around worked." Mary Gallagher has also made two interesting observations-- (a) Trump embraces the use of high and far-reaching tariffs, envisioning them as a tool to remake the U.S. economy as a fortress, internally strong and autonomous from other economies, and (b) he also apparently believes that tariffs can be used to fund a much smaller federal government. However, it is difficult to find economists or trade specialists who support Trump's proposed use of tariffs in this manner.
Analyst Alexander Clarkson has also noted that Trump has consistently shown resentment to more liberal European partners and sympathy for illiberal authoritarian regimes. As a result, U.S. relations with most of Europe during a second Trump term will likely be transactional at best and aggressive at worst.
Volodymyr Zelensky, Ukraine's President once labelled by Trump as "the greatest salesman in history" has sent an early message of congratulations. He has also talked up the political and economic opportunities a partnership could provide, and wants to be able to keep fighting in return. He has also drawn attention to the fact that he will not just have to consider further military support for Ukraine, but also how or whether to respond to North Korea's growing involvement in Russia's invasion.
Publicly, Kremlin is going out of its way to give the impression that it is not excited by a Trump victory. Kremlin spokesman Dmitry Peskov has also observed that "I am not aware of any plans for President Putin to congratulate Trump. Do not forget that America is an 'unfriendly country' which is directly and indirectly involved in a war against our State." Moscow had high hopes for Trump in 2016. However, it appears to be more cautious this time.
Other socio-economic analysts have also been expressing their views with great care when they are taking on the possible impact that Trump might have on the world economy after he has been sworn in as the United States President a few weeks later. Donald Trump's return to the White House with his well-known protectionist policies, according to some of these experts, might pose threats for the global economy, with the prospect of new trade wars, resurgent inflation and slower growth. It is also been recalled that during his first term in office from 2017 to 2021, Trump often resorted to punitive tariffs in disputes with trade partners.
In this 2024 campaign, he has also pledged to impose an additional 60 per cent import tariff on Chinese products and an extra 10 per cent tariff on products from the rest of the world. These dimensions have led experts to point out how these probable retaliatory measures might affect China, the European Union and the United States. The Roland Berger Consulting Firm has pointed out that the impact on the European Union economy will be US Dollar 533 billion through 2029, US Dollar 749 billion for the United States and US Dollar $827 billion for China. A separate study by the London School of Economics has estimated that the impact on emerging market nations such as India, Indonesia and Brazil would be much less.
Jamie Thompson, Head of macroeconomic forecasting at London-based Oxford Economics, has, however, observed that he sees little short-term economic impact due to the delays in implementing policies, but they could be positive for growth. He has noted that "while the outlook for 2025 is essentially unchanged, global growth is likely to be a little stronger in 2026 and 2027 on the back of the election result, as the impact of looser US fiscal policy more than often offsets the drag from targeted tariff measures." He has also added that "if across-the-board tariffs are imposed it could leave the global economy around 0.75 percent smaller -- and global trade down some three percent -- by the end of the decade."
Tara Varma, a Fellow at the Brookings Institution, a US think-tank, has interestingly observed that the prospects for international cooperation, which can boost trade and growth, will also be dimmer under a second Trump administration. She has also added that "the multilateral world of the 1990-2000s will no longer exist."
It has also been remarked that Donald Trump's policies could also rekindle inflation, which cooled following a series of interest-rate hikes that the Federal Reserve began to unwind this year. The Peterson Institute for International Economics, a US think-tank has estimated in this regard that such measures might end up adding between two and four percentage points to China's inflation rate.
Bank of France Chief Francois Villeroy de Galhau has also given certain views saying Trump's promised higher import tariffs would "mean higher inflation, at least in the US, and most probably lower growth throughout the world. It will be so because of increased uncertainty that would weigh on growth".
It has also been observed by another group of experts that the trade war that Trump has threatened to wage against China risks sapping global growth. The International Monetary Fund, it may be recalled, warned earlier this month that Asia accounts for 60 per cent of global growth, but would be hit hard by such a trade war between the United States and China.
Trump won the US election on a platform that promised steep import taxes, including tariffs as high as 60 per cent on Chinese-made goods. His victory is now likely to hinder Xi Jinping's plans to transform the country into a technology powerhouse - and further strain relations between the world's two biggest economies.
A property slump, rising government debt and unemployment, and low consumption had slowed down Chinese growth since the pandemic. So the stakes are now seen as higher than ever after Trump's announcement from the Standing Committee of the National People's Congress (NPC), the executive body of China's legislature. They are recalling that during his first term in office Trump hit Chinese goods with tariffs of as much as 25 per cent.
Gilles Moec, chief economist at insurer Axa has also observed that the impact of "immigration policy is as important as global trade" on inflation. In addition, Moec has drawn attention to the fact that the surge in inflation would force central banks to hit the brakes on the cycle of interest rate cuts they began earlier this year as inflation subsided. This connotes that if Trump follows through with his talk of a massive expulsion of unauthorised immigrants, it could aggravate labour shortage in the United States. The Pew Research Centre has estimated that 8.3 million unauthorised workers could be affected. The Peterson Institute for International Economics estimated this could add more than two percentage points to the US inflation rate next year, 0.2 percentage points in Europe and 0.6 percentage points in China.
Analysts had been looking at lower interest rates to spur consumers to spend and companies to invest and put some more wind into the sails of the global economy. It has also been mentioned that the United States has been one of the fastest growing developed economies. Nevertheless, some economists feel that Trump's policies risk shaving two percentage points off US GDP per year between 2027 and 2031 from baseline estimates, according to a forecast from the Peterson Institute.
Environmentalists and climate negotiators have also drawn attention to another dimension. Some of them have suggested that Donald Trump's victory in the US Presidential Election might have darkened the outlook for a strong deal at the COP29 Global Climate Summit and this might eventually create pressure on Europe and China to lead international progress in curbing planetary warming.
It has been reported that President-elect Trump is supposed to have not only called climate change a hoax but has also indicated that there is a possibility that the US might withdraw from the landmark 2015 Paris climate agreement at the start of his second Presidency. Some of his policy advisors have also apparently floated the idea of removing the US from the underlying UN Framework Convention on Climate Change (UNFCCC) ratified by the US Senate in 1992.
Such a negative approach by the Republican team has worried climate negotiators and observers who took p[art at the COP29 conference from Nov 11-22 in Baku, Azerbaijan. This has led environmentalists and climate vulnerability strategists, including Elisabetta Cornago, a senior research fellow at the Centre for European Reform to observe that "pushing for more ambitious climate finance is going to be almost impossible without the US buy-in, which will de-motivate developing countries from taking seriously the climate ambitions of the West."
This scenario has led Jennifer Morgan, Germany's State Secretary for International Climate Action to observe that it will be up to Germany and the European Union to maintain leadership in the climate finance discussions to ensure an acceptable result. One must remember that failure to land a strong climate finance deal would be a particularly big setback for the 45-country group of Least Developed Countries in UN climate negotiations, which is demanding countries pay up.
One needs to conclude here that pointing out this possible negative response from the United States in tackling climate change would make it vital for Europe and China to hold firm. The US, China, and the 27-country European Union are the world's biggest historical polluters.
Muhammad Zamir, a former Ambassador, is an analyst specialised in foreign affairs, right to information and good governance.
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