What might a Trump victory mean for the global economy?
A second term in office for the 'America First' administration would send shockwaves far beyond the United States' shores
Though he rails against "globalists" and insists that his is an "America First" platform, Donald Trump — like the rest of us — very much lives in an interconnected world. Here, the actions of a single nation are inextricably bound together with other countries in ways both obvious and subtle. Trump likes to insist that other world leaders are salivating for the supposed global stability that would accompany his return to the White House in 2025, the truth of the matter is decidedly more complicated. As domestic economists debate the impact of the Trump campaign's promise to levy extraordinary tariffs on all imported goods, international analysts are busy with their own calculations to determine the complex and cascading effects of a potential second Trump administration on global markets.
For his part, Trump has been characteristically fluid about the details of his economic plans, offering a host of broad and disparate recommendations largely featuring intense deregulation, lowered corporate tax rates, and the "most beautiful word in the dictionary": tariffs. Nevertheless, the prevailing sentiment among those who make it their business to understand the nebulous world of nation-level finances is that a Trump economy would "lead to higher prices, larger deficits, and greater inequality" domestically, a group of 23 Nobel Prize-winning economists said in an open letter backing Vice President Kamala Harris' domestic economic plan.
What did the commentators say?
Globally, a second Trump term would "affect commerce multidimensionally," the Financial Times said. Plans to enact "major shifts in the value of the dollar, the world's reserve currency, would have consequences that stretch far beyond Washington." Under Trump's proposed economic policies, a "protectionist and smaller U.S. economy would be a drag on global economic growth," University of Canberra Economist John Hawkins said at The Conversation.
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
Trump's "fondness for tariffs," a sentiment which "most economists do not share," would be particularly harmful internationally, CNN said. Not only would tariffs "hurt global economic growth and drive up inflation in the U.S.," they could do so overseas as well, "if other countries introduce higher levies on U.S. imports in response." A return of Trump to the White House is the International Monetary Fund's "elephant in the room," The Guardian said. His second term, and the "undesirable" economic policies that he would enact "could reduce global GDP by 0.5 percentage points in 2026."
Not only do economists argue Trump's claim that consumers wouldn't feel the effect of his tariff hikes is unrealistic, but his proposal might ultimately lead to a "sharp downturn in stock prices, particularly for U.S. multinationals that rely heavily on international supply chains," said Time magazine. A plan to levy a "60% import tax on Chinese goods and 10% tariff on other imports" could potentially lead to a double-digit decline from the S&P 500's "record" close of 5,792 earlier this month, Forbes said.
However, while Trump's proposals taken in unison might hurt the U.S. economy, they'd be "benefiting most others around the world," said the Peterson Institute for International Economics. Areas with "less U.S. trade would be less affected by the tariffs," the D.C.-based think-tank argued. This, in turn, would "attract higher capital inflows as investors, reacting to the erosion of Fed independence, seek to invest in countries with less exposure to the United States, providing a boost to GDP."
What next?
The "backdrop" to these arguments, said FT, is the current U.S. economy, which has proven particularly strong in these waning months of the 2024 election cycle. Particularly in light of Trump's plans to gut the Federal Reserve's independence, the next president should be "eager to build on what is currently a resilient economy" rather than undermining it, the outlet's editors said earlier this summer.
Trump has argued that his tariff plan would not only bring in significant revenue but "increase production at home, create high-paying jobs and decrease inflation," The New York Times said. But by enacting broad, universal tariffs, the ensuing "tit-for-tat" trade wars would "ultimately hurt every country by limiting trade, disrupting global supply chains, slowing growth and pushing up prices."
Sign up for Today's Best Articles in your inbox
A free daily email with the biggest news stories of the day – and the best features from TheWeek.com
Rafi Schwartz has worked as a politics writer at The Week since 2022, where he covers elections, Congress and the White House. He was previously a contributing writer with Mic focusing largely on politics, a senior writer with Splinter News, a staff writer for Fusion's news lab, and the managing editor of Heeb Magazine, a Jewish life and culture publication. Rafi's work has appeared in Rolling Stone, GOOD and The Forward, among others.
-
7 beautiful towns to visit in Switzerland during the holidays
The Week Recommends Find bliss in these charming Swiss locales that blend the traditional with the modern
By Catherine Garcia, The Week US Published
-
The Week contest: Werewolf bill
Puzzles and Quizzes
By The Week US Published
-
'This needs to be a bigger deal'
Instant Opinion Opinion, comment and editorials of the day
By Justin Klawans, The Week US Published
-
'This needs to be a bigger deal'
Instant Opinion Opinion, comment and editorials of the day
By Justin Klawans, The Week US Published
-
The political latitude of Musk's cost-cutting task force
Talking Points A $2 trillion goal. And big obstacles in the way.
By Joel Mathis, The Week US Published
-
John Prescott: was he Labour's last link to the working class?
Today's Big Quesiton 'A total one-off': tributes have poured in for the former deputy PM and trade unionist
By Harriet Marsden, The Week UK Published
-
'Rahmbo, back from Japan, will be looking for a job? Really?'
Instant Opinion Opinion, comment and editorials of the day
By Justin Klawans, The Week US Published
-
New York DA floats 4-year Trump sentencing freeze
Speed Read President-elect Donald Trump's sentencing is on hold, and his lawyers are pushing to dismiss the case while he's in office
By Rafi Schwartz, The Week US Published
-
'It may not be surprising that creative work is used without permission'
Instant Opinion Opinion, comment and editorials of the day
By Justin Klawans, The Week US Published
-
What message is Trump sending with his Cabinet picks?
TODAY'S BIG QUESTION By nominating high-profile loyalists like Matt Gaetz and RFK Jr., is Trump serious about creating a functioning Cabinet, or does he have a different plan in mind?
By Rafi Schwartz, The Week US Published
-
Gaetz ethics report in limbo as sex allegations emerge
Speed Read A lawyer representing two women alleges that Matt Gaetz paid them for sex, and one witnessed him having sex with minor
By Peter Weber, The Week US Published