A year marred by great economic uncertainties

Donald Trump will take charge as the US President for the second time on January 20, 2025. This has the potential of unleashing the biggest economic disruption global capitalism has seen.

- Roshan Kishore

In a move that could have far-reaching consequences for the world economy, Trump has promised imposition of large-scale tariffs as a bargaining tool to buttress US's economic dominance and well-being vis-à-vis other countries. Irrespective of what Trump might or might not do, his second presidency is likely to destabilize the rules-based international economic order significantly.

For the Indian economy, the consequences of a Trump presidency will mostly be via second-order effects.

China+1, or the global trend of countries and companies diversifying production facilities away from China in the wake of its tensions with the US, has been an important driver of positive sentiment around India's future economic prowess. Will a more mercantilist White House disrupt this process and major exporting countries and companies, re-evaluate their strategies around Trump's geoeconomics? It is difficult to answer this question as 2024 comes to an end. If Trump's past stint is any indication, flip-flops might be more likely than a permanent policy direction.