2024: President Trump's comeback
Geoeconomic implications of Donald Trump’s return to office.
Donald Trump has secured a second term in what appears to be a landslide victory following one of the toughest electoral campaigns in years.
Policy-making capacity was one of the main constraints of President Trump’s first administration. However, Donald Trump in 2024 is not the same as in 2016; he has brought figures like J.D. Vance, Elon Musk, and Bobby Kennedy Jr. into his circle, shifting away from reliance on the traditional GOP apparatus.
This new coalition has boosted Trump’s political platform and may also provide him with more effective policy-making tools. Still, while the campaign has ended, the true influence of those who accompanied Trump over the past few months remains uncertain until key appointments are made in the new administration.
The U.S. election is THE political event of the year and will have an impact far beyond America's borders. Donald Trump’s second administration will shape the world’s geopolitical and geoeconomic agenda for the coming years.
As we know, many of the policies President Trump highlighted during the campaign will be subject to the realities of practical politics. Bearing that in mind, here is my take of what we can expect in key policy areas with geoeconomic impact:
Foreign Policy
Foreign policy has been one of Trump’s stronger fronts in the campaign, running on an anti-interventionist platform.
Trump pledged to pursue peace negotiations for the conflicts in Ukraine and the Middle East, aiming to reduce U.S. military involvement overseas and decrease NATO funding.
In Ukraine, Trump stands a good chance of persuading Zelensky to negotiate with Putin for a settlement.
However, the Middle East conflict presents a far more complex scenario, with its outcome ultimately depending on the actors on the ground – Israel, Iran and the Gulf States.
Over the past 20 years, the Middle East has been a source of trouble for every U.S. president, and it won’t be any different for Trump this time.
With reduced U.S. foreign intervention, funding cuts may impact NGOs, the UN, and other institutions promoting the liberal order and values abroad.
Tensions with China are likely to rise in the short term, but this time, Trump seems more open to negotiations with Beijing, particularly in terms of trade policy.
Trump has suggested that Taiwan should fund its own security, and his stance on a potential Taiwan-China conflict remains unclear, contingent on domestic factors and the broader U.S.-China relationship.
Be smart: Peace talks with Russia could create tensions between Washington and some Nordic and Eastern European nations, while others, like Hungary and Germany, might welcome them.
However: If Trump secures a peace or truce between Ukraine and Russia, it could help ease tensions between the EU and China, given Beijing’s support of Moscow.
Trade Policy
Tariffs will be the defining word in Donald Trump’s trade policy.
A universal 10-20% tariff has been proposed on all imports, including those from Japan, the EU, and other partners.
Tariffs on Chinese products would have remained regardless of the election outcome, but Trump has pledged to raise tariffs on Chinese imports to 60%.
Trump aims to use tariffs to attract investment and manufacturing back to the U.S.
Trump mentioned that foreign companies establishing production plants in the U.S. will have open doors — even Chinese firms!
Reminder: despite a gentler tone compared to Trump, the Biden administration hasn’t been particularly considerate of the interests of U.S. partners.
The IRA subsidies for green manufacturing raised concerns among European industries, as did the obstruction of Nippon Steel's acquisition of U.S. Steel in Japan.
Bottom line: Tensions between America's tech and industrial interests and those of the EU and Japan were likely to grow regardless of the U.S. election outcome.
Deal will be the second most important word in Trump’s trade policy in his second term.
Tariffs might serve as a bargaining chip in broader trade negotiations, potentially involving other areas like defense spending by U.S. allies.
Be smart: Deal-making is difficult, especially in international settings. Tariffs may incentivize partners to accelerate negotiations, but even the author of The Art of the Deal can only accomplish so much in four years.
Elon China Factor: Tesla relies on China for a significant portion of its EV supply chain. Given Elon Musk’s influence in the campaign, he might be a mediator in U.S.-China relations.
Economic Policy
Tax Policy: Plans to extend the 2017 tax cuts, reduce the corporate tax rate to 15% for domestic production, eliminate taxes Social Security benefits, and reverse Biden's tax increases.
Energy: Pledged to expand oil and gas drilling on public lands, offer tax incentives for fossil fuels, and accelerate pipeline approvals and flexibilize permitting.
Although Trump previously opposed EV promotion, this position might shift due to Elon Musk’s influence in the campaign.
Tech Sector: With Elon Musk on the team, Trump’s administration will likely be tech-friendly, with expected government support for sectors like AI and favorable (de)regulation.
Industrial Policy: Making it easier for industries to build and produce in America has been a policy focus for Trump since 2016.
In contrast to the Biden administration, Trump is expected to pursue a more market-based approach rather than relying on large-scale public spending initiatives.
However: To pursue an ambitious reindustrialization agenda, America will need access to foreign supply chains, including those linked to China.
Balancing manufacturing supply chain needs with tariffs will be crucial for industrialization plans to succeed.
Some tech companies may raise concerns about potential restrictions on access to skilled migrant workers — won’t be an unsolvable challenge.
Bonus Track: Curious to see Robert Kennedy’s role in Trump’s administration and whether he might influence regulations in the pharmaceutical and food industries.
Final thoughts
Globalization is not only an economic reality but also a political and cultural battleground, with the U.S. at its epicenter. America’s internal dynamics will polarize electorates in other countries along similar lines as in the U.S.
Despite Trump’s clear victory, a certain degree of internal turmoil can be expected, depending on how the Democratic Party responds to the defeat. This will not only influence domestic policy developments but also impact the political climate in other Western societies and shape China and Russia's perception of the U.S.'s capacity to respond to their actions.
In Europe, for instance, President Donald Trump’s victory will likely boost right-wing nationalist parties’ momentum while signaling a green light from Washington to Brussels for strong measures against illegal immigration – we’re also likely to hear a lot about “European autonomy,” though it’s unlikely to materialize into meaningful action.
In the coming weeks, we will see how business and world leaders adjust to the new reality and how volatile fronts in Ukraine, the Middle East, and Taiwan play out in the final months before Biden passes the baton to Trump.
Soon enough, President Donald Trump will also face the challenges of translating his campaign promises into practical politics. We can expect more preparedness than in 2016, but navigating the waters of Washington will still be no easy task.
But one thing is certain for now: Donald Trump’s 2024 comeback will be the defining event of the decade.
Paternity kept me out of the business of power for a while, but this is the year’s big event, and I wanted to share my thoughts on it. As always, I’d love to hear yours.
Miquel