The state of the world economy after a second term for Donald Trump as president would depend on a variety of factors, including his policies, global trends, and geopolitical events. The odds for a better world is much higher than if it would be a Democratic win. That said, here are a few key areas that could shape the global economic landscape:
1. Trade Policies and Global Supply Chains
Trump’s first term was marked by a strong focus on protectionism, including tariffs on China and other nations. In the second term of Trump presidency, it’s possible in short term we would see a continuation or even escalation of such policies. This could:
- Increase costs for consumers and businesses due to higher tariffs and trade barriers.
- Potentially lead to more decoupling of global supply chains, particularly between the U.S. and China.
- Push countries to diversify supply chains, potentially leading to new trade agreements and regional alliances.
However, I think the chance is low that Trump will push further toward de-globalization and higher tariff systematically.
2. Tax and Regulatory Policies
Trump’s administration previously enacted significant tax cuts, particularly for corporations and high-income earners. A second term could involve further tax cuts or regulatory rollbacks, aimed at stimulating economic growth. This might:
- Benefit corporations, but could exacerbate income inequality.
- Increase the U.S. federal deficit and debt, which could have long-term implications for fiscal policy and global borrowing.
Tax and deregulation will benefit the US economic growth and should be welcome by the stock market.
3. Energy and Climate Policy
Trump was a strong proponent of fossil fuel industries and rolled back many environmental regulations during his first term. A second term could see:
- Further prioritization of oil, gas, and coal industries, which could affect global energy markets.
- Tension with international partners, especially on climate agreements like the Paris Accord.
I think a measured approach to climate changes is beneficial to the economy and good for environment overall.
4. Geopolitical Tensions and Global Instability
Trump’s foreign policy was often marked by an “America First” approach, characterized by skepticism towards international organizations, trade agreements, and alliances. His second term might:
- Continue to strain relationships with traditional allies, such as NATO and the EU.
- Contribute to rising global tensions, particularly with China, Russia, and Iran, which could create instability in key regions and markets.
- Lead to more isolationist policies, potentially reducing U.S. global influence in favor of economic and military self-interest.
5. Economic Growth and Employment
Trump’s economic policies have traditionally aimed at promoting short-term growth through tax cuts, deregulation, and a focus on boosting the manufacturing sector. While this might lead to job growth in certain sectors, there could also be:
- Potential trade wars or tariffs that harm U.S. exporters and global growth.
- Long-term risks related to the growing federal deficit, which could lead to economic instability.
6. Technological Innovation and Digital Economy
Under Trump, there was a hands-off approach to regulating big tech, leaving some room for innovation but also raising concerns over data privacy and monopolistic practices. In a second term, the tech sector could:
- Face less regulation in the short term, potentially benefiting companies like Amazon, Google, and Apple.
- See growing scrutiny on issues such as antitrust enforcement, data privacy, and AI regulation, especially as concerns over the digital economy and cybersecurity mount globally.
Conclusion
In sum, the world economy after a second Trump presidency could experience a mix of short-term growth driven by tax cuts, deregulation, and protectionism, but with significant long-term risks related to trade tensions, fiscal policy, and global instability. The degree of success or failure would depend heavily on how these policies are executed and how the international community responds to them.
I think the second term could see much few destructive policies and if Trump wants to leave a favourable legacy, I believe he will shift more toward to build rather than to destroy.
For China, Trump presidency is beneficial for longer term, if not for short term as well. China could take the opportunity to rebalance its growth structure and build a stronger foundation for robust and sustainable growth for years to come.