Will Trump change the world?

U.S. President Donald Trump second term will likely see the domestic and foreign policy priorities enacted in his first term as President revived and sharpened, institutions reformed further in line with his administration’s vision, and Americans’ socio-cultural response to the Trumpian paradigm.

Significant changes are expected in multiple dimensions of the policymaking space. First, on the economy, Mr. Trump has promised to bring back the extensive import tariffs of his first term, particularly those levied on China. India is likely to feature on the broader list of nations impacted by cross-cutting tariffs on critical commodities of global trade, such as steel and aluminium. Mr. Trump is also expected to enact a corporate tax cut or renew the lapsing cuts that his White House had first enacted in 2017. Second, on immigration, during the election campaign of last year, Mr. Trump repeatedly vowed to advocate for a mass deportation of undocumented workers and other categories of migrants, estimated at 11 million at latest count. Third, in terms of foreign policy — and against the backdrop of the first Trump administration’s exit from the Paris climate agreement, the Iran Joint Comprehensive Plan of Action, the Trans-Pacific Partnership, UNESCO, UNHRC, NAFTA, and more — the second term of the erstwhile business tycoon will probably lead to Washington continuing its withdrawal from global, multilateral and regional engagements. There is a distinct possibility that America’s inward retreat from global politics could have a direct impact on the wars in Gaza and Ukraine, broader conflicts in West Asia and the South China Sea, not to mention rocking the boat so far as a range of bilateral and regional arrangements are concerned. Lastly, Mr. Trump will continue to be seen not only as the only viable, charismatic face of the Republican Party, but also the founder and original leader of the MAGA movement, which began in 2016 as a mixed bag dominated by the economic despair of White America but soon transmogrified into the reassertion of unvarnished racism, misogyny and bigotry in American society.

Tariffs policies and tax cuts

The Trump 1.0 administration kicked off a trade war with China in 2018 when it slapped Beijing with tariff coverage of nearly 15% of all U.S. imports. Given that there were already several tariffs in place prior to 2018 too, this resulted in overlapping tariffs on a wide range of products. For example, a 25% tariff was imposed that year over and above an anti-dumping tariff of approximately 66% that was already in place. Notwithstanding this apparently ad hoc approach to tariff imposition, it was clear that China was the focus of the trade war on the global stage: the 11.1% import coverage by U.S. special tariffs in 2018 on products originating from that country considerably overshadowed the rate for other exporters to the U.S., including India, at 0.2%. Regarding the specific products targeted, the U.S. special tariffs preponderantly were imposed on intermediate goods, and to a considerably lower extent on final products and capital goods. Basic trade economics would suggest that this pattern of taxation would likely impact the final price of finished goods — typically sold to consumers in the U.S.

The impact on U.S. prices is relevant to the second Trump administration — as it will be the true test of whether any policy to hike tariffs has yielded a net benefit to the U.S. middle class — a critical cohort of voters in past elections. During Mr. Trump’s 2024 campaign, he said that he planned to impose an across-the-board tariff of approximately 10-20% on $3 trillion worth of U.S. goods imports and a China-specific extra tariff of 60%. If the new policy continues to target intermediate goods, there would likely be a significant increase from 2018-2020 in terms of the value of goods impacted, possibly to the tune of tens of billions of dollars’ worth on commodities such as steel and aluminium and at least $300 billion worth of Chinese goods. It would be safe to assume that retaliatory tariffs from China, the E.U., India, and other trading partners of the U.S. will follow swiftly.

The second major policy promise that Mr. Trump is likely to deliver on during his second term in office is a corporate tax cut, which could take the form of renewal of the lapsing cuts that he had introduced in 2017, through the Tax Cuts and Jobs Act. The idea of a tax cut is politically powerful, even if, in fact, last time around the Trump-led tax cut policy reduced taxes for most people while disproportionately benefiting the wealthy, according to the non-partisan Center on Budget and Policies Priorities (CBPP). The CBPP report at the time noted that Mr. Trump’s policy would provide households in the top 1% income bracket with an average tax cut of more than $60,000 if the cuts were maintained, a substantive reduction compared to an average tax cut of less than $500 for households in the lowest 60% income bracket. Further, the Trump tax cut “was expensive and eroded the U.S. revenue base… and failed to deliver promised economic benefits,” the CBPP noted.

While absolute clarity on the planned economic agenda of the second Trump term is elusive, additional policy actions — executive or via Congress — that the Trump White House might advocate for include quantitative restrictions on investments into U.S. assets, such as essential medicine production capabilities and infrastructure, by China and a carbon-border adjustment tax.

Mr. Trump’s White House would also likely seek to implement the recommendations of the Department of Government Efficiency — led by his supporters in the private sector, Elon Musk and Vivek Ramaswamy — to cut out wastage and inefficiencies within the machinery of the federal government, specifically by rationalising the actions of civil servants and eliminating unnecessary regulations across sectors. While the “tech bros” team has hinted at possibly discovering $2 trillion in savings via their plan proposal — which includes mass layoffs and closing certain agencies entirely, some have argued that the magnitude of the potential gains that could be made here has been exaggerated.

Action on immigration

Based on the Trump campaign’s policy promises prior to the 2024 election, it would be reasonable to surmise that the new administration will implement a large-scale deportation of undocumented workers, and perhaps several other categories of migrants. However, across several States, key urban hubs have promised to retain their “sanctuary cities” status by passing laws to limit local law enforcement cooperation with the federal government’s Immigration and Customs Enforcement. This may make it politically complicated to execute detention and deportation policies on a large scale and limited time frame, blunting the political gains that Mr. Trump’s White House would hope to make by enacting such a policy. Second, Mr. Trump’s team has not yet shared details on what such operations would cost the exchequer, although the non-partisan American Immigration Councill estimates that this immigration action proposal might potentially cost taxpayers considerably more than $300 billion. Nevertheless, there is little doubt that Mr. Trump will do whatever is in his power to accelerate deportations so that he is seen as fulfilling his campaign promises. It is relevant to note, in this regard, that the first Trump administration deported close to 1.5 million people, and this was the same number during outgoing President Joe Biden’s term. Former President Barack Obama turned away nearly 3 million people from U.S. soil during his time in office, although that was over two terms at the White House.

Expected impact of U.S. foreign policy

Among Mr. Trump’s campaign claims is his promise to end the Russia-Ukraine war imminently and nudge the Israel-Hamas conflict towards an acceptable conclusion. Regarding the former, Mr. Trump in fact vowed to end the war even prior to Inauguration Day, perhaps motivated by the fact that he views the conflict through the lens of halting the “endless flow of American treasure to Ukraine” and his oft-stated intention to get NATO allies in Europe to reimburse the U.S. for the latter’s war-related expenses in exchange for future military support from the U.S. against potential Russian aggression. His position on the war also diverges from that of Mr. Biden, given that he considers Ukraine ceding some portions of its occupied territories to Russia to be acceptable and he has also hinted that Kyiv could withdraw its NATO membership bid as an incentive to Putin to end the invasion. However, both Ukrainian President Volodymyr Zelensky and NATO Secretary-General Mark Rutte have unambiguously opposed these suggestions.

Regarding the Israel-Gaza turmoil, the President-elect has thus far not deviated significantly from the position of the Biden administration and criticised the Israeli government’s aggression in Gaza. However, Mr. Trump appeared to tacitly express support for Israel’s position by moving the U.S. embassy from Tel Aviv to Jerusalem. An important fact in this context is that the surprise ouster of Syrian President Bashar al-Assad late last year considerably impacted regional dynamics, perhaps prompting Mr. Trump to say that the war between Israel, Hamas, and Hezbollah is “more complicated” than Russia’s war with Ukraine.

While Mr. Biden reversed the first Trump administration’s decision to exit the Paris Agreement for global action on climate change, it is widely believed that Mr. Trump, in his second occupancy of the White House, will once again pull the U.S. out of the Agreement. However, some experts have argued that the economics of global renewables have changed significantly since 2020 and today work in favour of the clean energy transition in the country. Specifically, clean energy is said to be booming because of investments made under the Biden-era Inflation Reduction Act, a significant part of which have been pumped into regions that elected Republican lawmakers. This suggests that Mr. Trump might have to overcome opposition from within the Republican Party if he is to roll back the momentum on renewables. 

Power position

While the Trump 2.0 administration is yet to spell out critical details regarding its policy plans on the domestic and international fronts, one thing is certain – Mr. Trump enjoys an overwhelming mandate expressed through the result of the 2024 election. Further, he will be fundamentally operating from a position of institutional strength given the federal government trifecta, which implies that the White House will enjoy the luxury of greater cooperation in getting policies sanctioned by Congress, and possibly important cases ruled in his administration’s favour by a sympathetic U.S. Supreme Court.

Thus, to better understand the impact that the second Trump administration could have on the U.S. and world at large, it is also important to understand its motivations and, indeed, Mr. Trump’s previous actions and proclamations, along with the political context of his most recent rise to power. On the one hand, it is undeniable that he defied the odds, as predicted by pollsters and some sections of the U.S. media, and swept the seven swing States of the country in the 2024 election, winning both the popular vote and the electoral college, and therein ended the presidential run of Democrat candidate Kamala Harris. To an extent this indicates the disenchantment of the electorate with the previous administration, and it also says something about the entity that is Donald Trump, a rare leader in American politics, and the person at the helm of a unique populist-nativist movement that has redefined the terms of governance in the country.

Mr. Trump has worn many hats over the long arc of his 78 years, and as he dons the mantle of the oldest President to enter the Oval Office, the sheer dexterity with which he has moved across career ‘avatars’ – from inheritor of a real estate empire to a cult TV show personality and then the head of a sprawling conglomerate to ultimately being a two-term President – reflects on the deep changeability of his core, and the lack of a fixed view – his detractors would call them values – on his professional mission.

Born in Queens, New York, in 1946, as the son of a successful real estate developer, Mr. Trump studied at the New York Military Academy and the Wharton School of Finance and Commerce at the University of Pennsylvania. When he took control of the company of his father, Fred Trump, in 1971, he named it the Trump Organization, a corporate group that would go on to operate in a range of sectors including commercial and residential buildings, resorts, hotels, golf courses, and casinos. Among his several books was The Art of the Deal, published in 1987, which offers early hints about his belief that dealmaking is the true measure of success and the sole means to achieve it – a paradigm that runs contrary to the longstanding belief in, say, the U.S. State Department, that successful diplomacy entails “patiently building and deepening alliances and partnerships… playing a constructive role in regional institutions and investing time, at the highest levels, in regional summits.”

In a move that once again reflected what appeared to be Mr. Trump’s devotion to gimmickry and theatrics, at whose altar the loyalty of all his employees would be tested and judged, in 2004, he launched the hit reality television show The Apprentice. With his now famous dismissal line of “You’re Fired” going viral as a pop culture meme, the show solidified Mr. Trump’s credentials in the world of entertainment television, even if it prompted questions about his business ethics as they applied broadly across the Trump Organization.

Especially by the time of his first presidential campaign in 2015, it became clear that no major U.S. company has filed for Chapter 11 bankruptcy protection more than Mr. Trump’s Atlantic City casino empire in the past 30 years, four distinct filings. In each of those cases, the implied corporate restructuring allowed Mr. Trump’s companies to stay afloat while shedding the unsustainable debt that it owed to banks, employees and suppliers.

Surprise win in 2016

With his record steeped in Wall Street shenanigans and proximity to power-broking at the highest echelons of the system, it came as a shock to many that Mr. Trump rose to meteoric heights in his campaign for the 2016 presidential election, all the while marketing himself as a man of the people, the saviour of blue-collar jobs in the Rust Belt, and as political maverick far removed from the Washington’s elite policymaking circles. Even his campaign slogan, “Make America Great Again”, was widely marketed to the benefit of the Trump campaign — reports suggest that, during 2024 alone, more than a million hats were sold at $40 per piece. However on the eve of the 2016 election, major newspapers projected 90% odds that his rival, Democrat and former Secretary of State Hillary Clinton, would win the presidency — a failure by the U.S. mainstream media to recognise that Mr. Trump was in fact at the helm of a global nativist-populist movement that was poised to upturn the liberal economic consensus in the West and deglobalize its trade, investment and strategic cooperation paradigm by gradually eroding the rules-based international order.

While he lost the popular vote to Ms. Clinton, the electoral college saved Mr. Trump and put him in the White House for his first term, four years that witnessed a slew of policies that flew in the face of received wisdom for public policy on immigration, healthcare, defence, foreign relations. While his eyebrow-raising record as the 46th Commander-in-Chief is well known, his most controversial policy outcomes included bungling mismanagement of the COVID-19 pandemic response that led to “tens of thousands of unnecessary deaths”; his broad-brush hostility towards minority demographics exemplified in the “Muslim ban” and family separations carried out against undocumented migrants; his triggering of a trade war due to protectionist trade policies including tariffs in foreign aluminium, steel, and other products; his attempts to pressure Ukrainian President Volodymyr Zelensky into seeking evidence of corruption against President Joe Biden’s son, Hunter; and, most egregiously, his role in encouraging a violent mob which attacked and ransacked the U.S. Capitol buildings in early 2021 disputing his certified loss to Mr. Biden in the presidential election a few months earlier.

Yet two impeachments, four criminal indictments, one fraud case conviction and an $83.3 million sexual assault judgment later, Mr. Trump has not just apparently won redemption in the eyes of the American voters, but has romped home to the White House on the back of a “red shift” in voting patterns that impacted almost every State – red and blue – in his favour. This time, post-election analyses suggest, independent and undecided voters in swing States were not even debating major questions of economic policy, such as the actual performance record of the Biden White House. Instead, it was “media appearances” such as the three-hour podcast conversation between Trump and Joe Rogan, a popular conservative commentator, that appeared to shift the mood in favour of Mr. Trump, as much as the optics of Mr. Trump warning Americans from the campaign podium about the dangers of unchecked immigration.

A cabinet of loyalists

Now that Mr. Trump has the backing of the federal government trifecta – the White House, the House of Representatives and the Senate controlled by the Republican Party – and a Supreme Court stacked with a 6-3 majority favouring conservative justices, he has a relatively free hand to reshape U.S. policy and institutions. The cabinet that he has picked appears to have prioritised personal loyalty through the campaign season above all else – his former associates turned detractors, including Nikki Haley, have been side-lined, and instead a new cohort of conservatives has been picked despite their glaring lack of prior experience in the White House.
Notable among them, are Susie Wiles as White House chief of staff, Marco Rubio as Secretary of State, Robert F. Kennedy Jr. as Health and Human Services Secretary, Tulsi Gabbard as Director of National Intelligence, Tom Homan as “border czar”, Pete Hegseth as Defense Secretary, Lee Zeldin as EPA Administrator, Mike Huckabee as U.S. Ambassador to Israel, and Elon Musk and Vivek Ramaswamy as heads of Department of Government Efficiency.

While Ms. Wiles has experience as a political operative in Florida, Mr. Rubio, who hails from the same State, is known to be a hawk on China. Mr. Kennedy has been described as “a hardcore anti-vaccine and misinformation peddler [and the] last time he meddled in a state’s medical affairs (Samoa), 83 children died of measles.” Ms. Gabbard does not have any experience in intelligence and she is staunchly opposed to U.S. support to Ukraine in the latter’s fight against the Russian invasion. Reports also suggest that her “views on Russia and her 2017 meeting with Syrian leader Bashar al-Assad have drawn controversy”.

Mr. Homan was the acting director of U.S. Immigration and Customs Enforcement (ICE) during the first Trump administration and Mr. Trump has said he “will be in charge of all Deportation of Illegal Aliens back to their Country of Origin”. While Mr. Hegseth has experience as an Army veteran who was deployed to Iraq, Afghanistan and Guantanamo Bay, he has since been a co-host of “Fox & Friends Weekends” a show on the conservative news channel. Mr. Zeldin is a former New York Republican Congressman who Mr. Trump said would “ensure fair and swift deregulatory decisions that will be enacted in a way to unleash the power of American businesses, while at the same time maintaining the highest environmental standards.” Mr. Huckabee is also a TV personality — he has hosted a show on Fox News as well, and a radio programme, though he has a State-level public sector experience as Governor of Arkansas, from 1996 to 2007. Mr. Musk and Mr. Ramaswamy — ironic though it might seem to have two heads of a department designed to reduce government waste and excess – are from the private sector but have been noteworthy for speaking out strongly for Mr. Trump throughout his 2024 campaign.

Between all these potential nominees — assuming they are confirmed by the Senate, still a tall order in the case of several of Mr. Trump’s nominees — the presumed agenda would be to implement the Trump MAGA vision to the fullest extent possible over the four years.

Trumpism unleashed

After four more years of Mr. Trump, the U.S., and indeed the world, may be a very different place. His second term is coterminous with the zenith of the MAGA movement. What began in 2016 as a poignant political assertion of the basic principles of Trumpism — a complex blend of genuine economic despair and social disempowerment of White America with an unapologetic articulation of baser sentiments rooted in racism, misogyny and bigotry — will now find free flow and seep into every public institution of the U.S. and transform the very core of the socioeconomic landscape of the country. Mr. Trump’s time at the helm of this movement will end one day, but the forces that he has unleashed may live well beyond that time.