Trump's Impact

As President-elect Donald Trump prepares for his second term in office, the global economy braces for a wave of uncertainty.

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His return to the White House on January 20 comes amid an already challenging economic environment shaped by inflationary pressures, uneven growth, and fragile geopolitical dynamics.

The implications of Mr. Trump's protectionist policies, particularly his threats of new tariffs on China, Canada, and Mexico, signal a turbulent year ahead for international trade and economic stability. At the core of Mr. Trump's economic agenda lies an inward-looking approach that prioritizes US manufacturing through tariffs and deregulation.

While these measures may stimulate certain domestic industries in the short term, they risk fracturing global supply chains that have been decades in the making. The automobile industry, for instance, relies heavily on cross-border cooperation among the US, Canada, and Mexico. Imposing higher tariffs on these partners could disrupt production, inflate costs, and suppress consumer demand, creating ripple effects that harm all three economies.

China, already grappling with domestic challenges such as weak consumer spending and a struggling property sector, stands to lose further ground under heightened US trade barriers. Though Beijing has expressed optimism about its economic trajectory, any additional tariffs could exacerbate its reliance on domestic demand, limiting its ability to drive global growth.

Notably, the World Bank has highlighted the need for China to address its internal vulnerabilities, such as improving local government finances and social safety nets, to sustain recovery. Europe, too, finds itself on uncertain footing. The euro-zone's growth remains tepid, hindered by political instability in key economies like Germany and France.