WORLD
The world watches with bated breath, as Mr Trump is set to take charge next year
- IBJ Bureau
- Nov 27, 2024
On January 20, 2025, Donald Trump will assume office as the 47th president of the United States (US). Last month, Mr Trump, 78, swept to a decisive victory over Democratic Party rival Kamala Harris after winning several crucial swing States. The presidential campaign – which ultimately propelled Mr Trump and his Republican Party to victory – is seen as one of the most acrimonious electoral battles in the American history.
The world, in the meanwhile, is waiting with bated breath, as Mr Trump is set to assume office next year. Mr Trump stormed into the White House with the spirited MAGA (Make America Great Again) campaign. Within the US, there has been palpable resentment towards the process of globalisation, fuelled by a perception that the rest of the world has benefited at the cost of the US. Since the start of his first presidential campaign in 2016, Mr Trump has aggressively voiced this sense of grievance and repeatedly promised to protect US interests by adopting policies that are firmly “America First”.
Mr Trump has promised not to get the US entangled into new international conflicts. He is unlikely to ramp up support to Ukraine in its war with Russia. However, there may not be any paradigm shift in the US’ stance in the Israel-Hamas war. The Trump administration, on the other hand, is likely to strengthen Israel’s hand further, given his proximity to the Jewish cause.
A key feature of his first tenure as president was the sharp ramping up of tariffs and trade restrictions against China. In his second term, Mr Trump has promised to do more of the same. He intends to use punitively-higher import tariffs as the primary weapon to cut trade deficits that the US has with the EU countries and Asian economies such as China, South Korea and even India. The proposed high tariffs – 20 per cent across the board on all imports into the US and 60 per cent on Chinese imports – could disrupt global trade horribly. Besides, the new US president may intensify the ongoing trade war with China.
High US import duties are expected to raise the US’ domestic inflation and force the US central bank to keep interest rates high. Elevated US rates could attract foreign investors to pump money back into US markets. This would lead to another round of bearishness in the bourses across the emerging markets, including India. This would further strengthen the dollar against other global currencies, including the rupee, pushing up inflation and forcing the RBI to raise the policy rate.
India too seems to be on the hit list of Mr Trump. In fact, in one of his statements during the campaign, he had termed India “the biggest tariff charger of the world”. Yet, many Indian analysts see Mr Trump’s return as beneficial to India. They point out that the US under Mr Trump would go all out after China and possibly strengthen ties with India to act as a counterweight to China.
It is also well known that the US president-elect is a strong votary of oil and gas. This does spell doom for renewable energy and climate funding. However, there could be a spike in US production of oil and gas, and the surplus may bring down prices and help India, the world’s third-largest crude oil importer.
All said and done, Mr Trump is a businessman. And all of his poll rhetoric may not turn into reality. So, deft negotiations with the new US president would help cut fair deals. Indian negotiators know that well, and may already be ready for negotiations with Mr Trump.
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