Threat to the global economy?
During his first reign from 2017 to 2021, he resorted Trump Repeatedly imposed punitive customs duties in any disputes with his country’s trading partners.
During his election campaign in 2024, he pledged to impose additional customs duties of 60 percent on Chinese imports and additional duties of 10 percent on goods coming from the rest of the world.
Taking potential retaliatory measures by Beijing and Brussels into account, the cost to the economy is high European Union It will reach $533 billion until 2029, with the United States at $749 billion and China at $827 billion, according to a study by Roland Berger, a consulting firm.
A separate London School of Economics study estimated that the impact on emerging markets such as India, Indonesia and Brazil would be less.
Jamie Thompson, director of the macroeconomic forecasts department at Oxford Economics in London, said that he sees a lesser economic impact in the short term due to the delay in implementing policies, but it may be positive for growth.
He told Agence France-Presse, “While expectations for the year 2025 will not change, it is likely that global growth will be slightly stronger in 2026 and 2027 against the backdrop of the election results, as the impact of easing restrictions on US financial policy will more than offset the repercussions of targeted tariffs.”
But if large-scale tariffs are imposed, “they could reduce the global economy by about 0.75 percent and global trade by about three percent by the end of the decade.”
Tara Varma from the American Brookings Institute said that the prospects for international cooperation that could boost trade and growth will be less bright during the second Trump administration.
She explained that “the multilateral world of the 1990s and the beginning of the millennium will no longer exist,” adding that she expects a major change in American policies.
High inflation?
Donald Trump’s policies could also revive inflation, which has fallen after the Federal Reserve began raising interest rates several times this year.
The Peterson Institute for International Economics estimated that Trump’s policies could lead to a rise in China’s inflation rate by between two and four percentage points.
In turn, AXA’s chief economist, Gil Mueck, pointed out that the impact of “immigration policy is as important as global trade” on inflation.
If Trump implements his pledge to expel irregular immigrants on a large scale, this would exacerbate the problem of labor shortages in the United States.
The Pew Research Center estimates that the move could affect 8.3 million unauthorized workers.
The Peterson Institute for International Economics indicated that this could raise the inflation rate in the United States by more than two percentage points next year, raise it in Europe by 0.2 percentage points, and 0.6 percentage points in China.
Mueck pointed out that the high inflation rate will force central banks to put an end to the cycle of lowering interest rates that they began earlier this year as inflation declines.
Analysts are looking for lower interest rates to get consumers to spend, companies to invest and push the global economy forward.
Will the trade war put an end to growth?
The trade war that Trump has threatened to launch against China risks negatively affecting growth.
Asia contributes to 60 percent of global growth, but it will be greatly affected if any trade war breaks out between the United States and China, according to a warning issued by the International Monetary Fund earlier this month.
The United States was also one of the fastest-growing advanced economies, but Trump’s policies risk reducing the baseline estimate of US gross domestic product by two percentage points annually between 2027 and 2031, according to forecasts by the Peterson Institute.
