On July 8, 2024, in the production workshop of a textile company in Binzhou, China, a worker was making textile export orders.
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Donald Trump’s electoral victory over Vice President Kamala Harris marks his historic return to the White House – an extraordinary political comeback that could have huge ramifications for the global economy.
Earlier on Wednesday, Trump said in a speech to supporters in Florida that “unprecedented power” would usher in “a golden age for America.”
The former president’s litany of campaign promises included steep tariff increases, tax cuts, deregulation and a push to withdraw from key global agreements.
Analysts said it was difficult to determine the extent to which Trump would seek to implement such measures during his second four-year term, but the consequences of any measures would have clear repercussions around the world.
Lizzy Galbraith, a political economist at asset management firm Abrdn, said it remains to be seen what kind of presidency investors can expect when Trump returns to the White House.
“Congress has a very important role to play in this,” Galbraith said Thursday on CNBC’s “Squawk Box Europe.”
“If Trump does have unified control of Congress, which seems likely and is what we expect to happen in the coming weeks and days, then he does have greater latitude to enact his tax cuts. agenda, such as his deregulatory agenda, but we may also see some elements of his trade policy.
Regarding tariffs, Galbraith said there are two schools of thought. Trump can either try to use them as bargaining tools to extract concessions from other parties, or he can follow through on his promises and implement them more broadly.
Trump’s favorite words
Trump has previously descriptive “Tariff” became his favorite word, calling it “the most beautiful word in the dictionary.”
To increase revenue, Trump has suggested that he could impose a 20% tariff on all goods imported into the United States, with tariffs of up to 60% on Chinese products and up to 60% on American products. Up to 2,000% On vehicles manufactured in Mexico.
At the same time, regarding the European Union, Trump said that the 27-country European Union will pay “big price“Because we’re not buying enough U.S. exports.
Former US President Donald Trump arrives for a “get out the vote” rally in Greensboro, North Carolina, USA, Saturday, March 2, 2024.
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“Now, I think it’s worth pointing out that we do think that in any scenario where Trump uses tariffs regularly, his primary focus is going to be China. And we don’t see Trump’s secondary tariff commitments — that is Benchmark tariffs, which will hurt European companies – because that is entirely feasible,” Galbraith said.
She added: “So our base case is not necessarily that you see something like baseline tariffs really harming European goods, although it’s still possible that specific European products will be affected.”
Analysts warn that Trump’s plan to impose widespread tariffs is likely to raise prices for consumers and slow spending.
Europe
Ben May, head of global macro research at Oxford Economics, said that Trump 2.0 may have limited direct impact on economic growth in the short term, “but it masks the significant impact on trade, growth composition and financial markets. “
For example, May said that if the more radical aspects of Trump’s policy agenda were adopted, particularly on tariffs, the global impact would be “very large.”
“A key unknown is whether a clean sweep will increase the risk that the Trump administration will pursue more extreme policy measures, such as larger, less targeted tariffs,” May said in a research note.
He added: “Uncertainty about Trump’s stance on conflicts in Ukraine and the Middle East also increases the risk of greater instability in both regions, which could have consequences for regional and global growth.”
The prospect of a second Trump term as president has long been seen as a negative for Europe and the EU more broadly.
However, analysts at Signum Global Advisors said in a research note on Wednesday that “the significance of this fact remains underappreciated.”
Indeed, they argue that several factors mean the EU could be the “biggest loser of a second Trump era”, citing trade tensions, continued frustration with key European policy decisions and Trump’s possible desire to increase U.S. Advantages in attracting capital for relocation.
Asia
Analysts at Macquarie Group said on Thursday that on the face of it, Trump’s election victory was “bad news for Asia, especially China,” but the region was “in a better place than it was when Trump was in the White House in 2016.” Be more prepared.”
On June 7, 2024, a cargo ship was sailing to a foreign trade container terminal in Qingdao Port, Qingdao Port, China.
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“A key tenet of Trump’s campaign was higher tariffs,” analysts at Macquarie Group said in a research note. “While there are ample signals, headwinds that are likely to engulf Asia as a whole, and China in particular, should Adding to volatility and compressing multiples as uncertainty prevails.
“The counterbalance to this is likely to be an acceleration of China’s stimulus measures,” they added. “The Chinese government has outlined ambitions to support economic growth at the 5% level and address issues in the housing market to support domestic consumer confidence.”
Mitchell Rice, an American diplomat and distinguished fellow at the Royal United Services Institute (RUSI) think tank, said Trump’s strategy may be different this time.
“I think President-elect Trump has said that he wants to raise tariffs on China again until the playing field is leveled,” Rice told CNBC’s “Squawk Box Europe” on Thursday.
“The last time Trump won, what was interesting was the number of China hawks in his administration. It was a very tough one in terms of personnel and how they viewed China as a rival to the south and an expansionist. The government’s actions in the China Sea are contrary to the values of the United States and our friends and allies around the world,” he continued.
“So, I don’t think that’s going to change. I think our economic interaction with China may mitigate that a little bit, but I think it’s going to be a complicated relationship going forward.”
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