A worker places textile export orders at a production workshop of a textile company in Binzhou, China, July 8, 2024.
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Donald TrumpIt is electoral victory Vice President Kamala Harris’ victory marks a historic return to the White House – an extraordinary political comeback that will likely have seismic consequences for the global economy.
Speaking to supporters in Florida early Wednesday, Trump said a “powerful and unprecedented mandate” would mark the beginning of “America’s Golden Age.”
The former president’s litany of campaign promises includes high prices, tax cuts, deregulation and a push for withdraw from major global agreements.
Analysts say it is unclear to what extent Trump will seek to implement these measures during his second four-year term, but the consequences of doing so will have clear repercussions across the world.
Lizzy Galbraith, a political economist at asset manager Abrdn, said it remains to be seen exactly what style of presidency investors can expect when Trump returns to the White House.
“Congress has a very big role to play in all of this,” Galbraith told CNBC.Squawk Europe Box” THURSDAY.
“If Trump has unified control of Congress, as seems very likely and is what we expect in the weeks and days ahead, then he will have greater latitude to implement his agenda of cutting taxes. taxes, his deregulation agenda, for example, but we will probably also see elements of his trade policy alongside that.
Regarding tariffs, Galbraith said there are currently two schools of thought. Either Trump seeks to use them as a negotiating tool to extract concessions from other parties, or he keeps his promise and implements them much more broadly.
Trump’s favorite word
Trump has already describe “rate” as his favorite word, calling it “the most beautiful word in the dictionary”.
In an effort to raise revenue, Trump suggested he could impose a 20% rate on all goods imported into the United States, with a tariff of up to 60% for Chinese products and a up to 2000% on vehicles built in Mexico.
For the European Union, Trump said the 27-nation bloc would pay a “big price” for not buying enough American export products.
Former US President Donald Trump arrives at a ‘Get Out The Vote’ rally in Greensboro, North Carolina, US, Saturday March 2, 2024.
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“Now, I think it’s worth pointing out that we think that in any situation in which Trump resorts to tariffs quite often, his primary focus will be on China. And we don’t see Trump’s secondary tariff commitment – that tariff basic”. , which would hurt European businesses – because it is entirely feasible,” Galbraith said.
“So our base case scenario does not necessarily foresee the application of a base tariff that would actually harm European products, although there is always a distinct possibility that specific European products could be affected,” she said. added.
The analysts have warned that Trump’s plan to impose universal tariffs is very likely to raise prices for consumers and slow spending.
Europe
Ben May, director of global macroeconomic research at Oxford Economics, said Trump 2.0’s direct impact on economic growth would likely be limited in the short term, “but masks major implications for trade and the composition of growth, as well as for the financial markets. “
For example, May said that in a scenario in which the most radical aspects of Trump’s policy agenda were adopted, including on tariffs, the impact across the world would be “very significant.”
“A key unknown is whether a clean slate will increase the risk that a Trump administration will impose more extreme policy measures, such as higher and less targeted tariffs,” May said in a research note.
“Uncertainty over Trump’s stance on conflicts in Ukraine and the Middle East also adds to the risk of greater instability in both regions, which could have adverse consequences for regional and even global growth” , he added.
The prospect of a second Trump presidency has long been seen as negative for Europe and the European Union as a whole.
Yet analysts at Signum Global Advisors said in a research note Wednesday that “the magnitude of this truth remains underestimated.”
Indeed, they argued that several factors meant the EU would likely be “the biggest loser in a second Trump era”, citing trade tensions, ongoing frustration with key European policy decisions and the likely desire of Trump to double America’s advantage in attracting capital. moving.
Asia
Macquarie Group analysts said Thursday that, on the face of it, Trump’s election victory is “bad news for Asia”, particularly China, but that the region is “better prepared” than in 2016, when he entered the White House for the first time.
A cargo ship sails toward the berth of a foreign trade container terminal in the port of Qingdao, Shandong province, Qingdao, China, 7 June 2024.
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“A key tenet of Trump’s campaign was increasing tariffs. Although well publicized, the headwinds likely to sweep across Asia, particularly China, are expected to increase volatility and compress multiples as uncertainty prevails,” a Macquarie Group analyst said in a research note.
“A counterbalance to this would be a likely acceleration of stimulus measures in China,” they added. “The Chinese government has already outlined its ambitions to support economic growth at the 5% level and tackle problems in the real estate market in order to support domestic consumer confidence.”
Mitchell Reiss, a US diplomat and distinguished fellow at the Royal United Services Institute (RUSI) think tank, said there would likely be differences from Trump’s playbook this time around.
“I think President-elect Trump has said that he would like to raise tariffs on China again until there is a level playing field, in his opinion,” Reiss told Squawk Box Europe on Thursday. ” from CNBC.
“What was interesting the last time Trump won was the number of China hawks that made up his administration. It was a very tough administration in terms of personnel and in terms of viewing China as an adversary and an expansionist in the South China Sea and contrary to the values of America and their friends and allies around the world,” he continued.
“So I don’t think that’s going to change. I think it might be mitigated a little bit by the economic interaction we have with China, but I think it’s going to be a complicated relationship going forward.”