The re-election of Donald Trump as the US President has brought significant uncertainty
to the global economy, with potential implications for international trade, currency
stability, and economic growth. Amid apprehension about his potential trade tariffs and
other sanctions, Trump is due for inauguration on January 20, 2025.
Some areas of major concern include:
Trade Policies and Tariffs
President Trump’s proposed trade policies include imposing tariffs of at least 60% on
Chinese imports and 10% to 20% on goods from other countries. Such measures could
increase tariffs to levels that have never been seen since the Great Depression, which
would likely disrupt global trade flows and economic stability. Analysts predict that these
tariffs could reduce global economic growth by one percentage point by 2026, with
countries like China and the European Union experiencing notable GDP contractions.
Impact on the U.S. Dollar and emerging economies
While President Trump has expressed a preference for a weaker U.S. dollar to enhance
export competitiveness, his policies may unintentionally strengthen the US currency.
Factors contributing to this include expected fiscal expansion through extended tax cuts,
leading to inflationary pressures and higher interest rates. A stronger dollar could pose
challenges for emerging economies by increasing the cost of dollar-denominated debt
and imports, potentially destabilising global financial markets.
Business Uncertainty
The unpredictability of U.S. policies under President Trump has heightened economic
policy uncertainty, negatively affecting business investment and hiring decisions.
Studies indicate that increased uncertainty can slow economic growth, with estimates
suggesting a potential reduction in GDP. This situation complicates strategic planning
for businesses and may dampen the effectiveness of policy measures aimed at
stimulating economic activity.
Global Economic Outlook For 2025 And Beyond
Protectionist trade policies, potential currency appreciation, and policy uncertainty
expected under President Trump’s administration present complex challenges for the
global economy in 2025 and the years ahead. Stakeholders worldwide are expected to
monitor these developments closely, as they may influence international trade
dynamics, investment decisions, and economic growth trajectories in the coming years.