Sign up for the free White House Watch newsletter
Your guide to what the 2024 US election means for Washington and the world
What effect will the second coming of Donald Trump have on the world? The world is unpredictable. Trump is also unpredictable. His first presidency changed the US and the world. His partner can have a profound influence.
“Starting today,” Trump said in his first speech“The United States of America shall be a free, sovereign and independent nation.” We are so used to such self-pitying expressions from him and those around him that they have (almost) stopped being shocked. However, you are talking about the most powerful country in the world, which has been at the forefront of innovation for a century and a half, and has shaped the world we live in. nation? The answer, it seems, is self-imposed obligations and voluntarily accepted limitations on its power. Now, he suggests, the US will do whatever it wants. The US stops pretending to be a moral leader: it declares itself another great power under the old slogan: “it can do good”.
How does the world view this event? In “Alone in a Trumpian World”, European Council on External Relations has just published the results of a worldwide public opinion poll. They are interesting. The people most disturbed by Trump's second coming are the citizens of his closest allies. Only 22 percent of EU citizens, 15 percent of Britain and 11 percent of South Korean citizens think that his return is a good thing for their country. Meanwhile, 84 percent of Indians, 61 percent of Saudi Arabians, 49 percent of Russians and 46 percent of Chinese think their country is good. (See tables.)
This, suggests the report, reflects “the public's acceptance of a more transactional world”. However, for the US's closest allies it marks the end of the bonds of trust they depend on. They can be free riders for US power no longer exists. Maybe that works well for them. But this is more than just depending on them. Post-war Europeans really believed in the “liberal international order”. For them, its disappearance is a great disappointment. The so-called “global south” has often not happened and is therefore more comfortable with Trump's transactional approach.
In two important areas – trade and the global environment – Trump's approach will create unique challenges. In the past, there was indeed order, built around global institutions that promoted trade liberalization and provided greater stability to the structure of the trading system. This was especially important for small economies dependent on trade. As a result, the world trade in goods and products increased from 5 percent at the end of the second world war to 15 percent at the end of the cold war and 25 percent on the eve of the global financial crisis. Since then it has stopped.
How much damage will the tax wars started by Trump do? Trade has fallen before. Will it happen again? Trump has the idea (one of his many absurdities) that foreigners will pay his taxes. In fact, the American people will say: he is not only a bully, but an idiot. Pity the poor in Canada and Mexico. How should the victims react? revenge, argues Dani Rodrik of Harvardit is a cost to those who receive it. So, be careful.
The second important area is climate change. This, say the Maga Republicans, is a lie. So, Trump declares “we're going to rot, baby, dig us”. By 2024, according to NASAglobal temperatures were 1.28C above their 1951-80 baseline, the highest ever recorded. The atmospheric concentration of CO₂ continues to rise. So, it will be “burn, baby, burn”. This indifference to the future of the planet can be dangerous. That, too, is causing great concern around the world.
This time, will King Donald be able to revive the American economy? Impossible, because the economy he inherited is far from the disaster he declares it to be. In contrast, the US economy has outperformed its peers since the pandemic. It's January Global Economic UpdateThe IMF says “growth is expected to be 2.7 percent in 2025”. This is 0.5 percentage points higher than in the October forecast and a rate other high-income economies can only dream of. Trump should thank Joe Biden for this money.
As things stand, the easiest way from here is down. In the short to medium term, a combination of loose monetary policy, tariffs and large-scale deportations of immigrants is likely to keep inflation under control. That would then lead to a disturbing conflict between the president and the Federal Reserve. Combined with a new start of financial deregulation, this could cause another financial crisis. This, in turn, could cause the historically overvalued stock market to collapse, a metric that Trump cares about. Moreover, Trump gets a budget deficit estimate of Congressional Budget Office at 6.2 percent of GDP this year, with public debt at 100 percent and rising rapidly. This is an unstable method. The hope seems to be that major spending cuts will close the gap. But these will not be big enough and will come at the expense of his political supporters. Perhaps, in his second term, he no longer cares. But of course they will.
Trump is unpredictable. Perhaps, he will bring a just peace to Ukraine and the Middle East. Perhaps, he will put most of his threats and promises in the Oval Office waste paper basket, bask in his status and leave his country and the world in good shape. Massive damage to the western alliance, global trade, the global environment, and US and global institutions seems likely. Yet he declared, in this speech, that: “My proudest legacy will be to create peace and unity.” That's what I want to be.” This is what we all want him to be, too.