The strategic priorities in the economic domain will remain highly challenging because of Trump’s limited understanding of the patterns of global economic growth and its direct correlation to the US economy.
The US President-elect Donald Trump’s second term undoubtedly will start in a completely different geopolitical and geo-economic setting in comparison to his first term. The world is witnessing unstoppable conflicts—Russia-Ukraine, Israel-Hamas. Global economic stress remains another factor for Trump in comprehending the larger challenges in evolving his strategic priorities. The slowing down of the global economy has put a greater risk for the US economy in managing inflation domestically.
During his election campaign, Trump had made a highly inflated statement that he would end the Russia-Ukraine conflict within “24 hours” by bringing together Russian President Vladimir Putin and Ukrainian President Volodymyr Zelenskyy for dialogue and negotiation. But this seems far from the reality in the current geopolitical situation. On the other hand, Trump’s recent affirmation that the Israel-Hamas conflict is more complicated but easier to resolve also looks like an understatement because of the emergence of newer dynamics in Syria and the associated challenges. Trump will keep attempting to underscore his priorities in both the ongoing conflicts.
The strategic priorities in the economic domain will remain highly challenging because of Trump’s limited understanding of the patterns of global economic growth and its direct correlation to the US economy. There is now a renewed debate on Trump’s idea of enhancing tariff and how that would lead to a second trade war with China. The ongoing debate among members of the Global South in general and the emerging economies in particular relating to “de-dollarisation” and coming up with a newer mechanism for global financial transaction also has emerged as a factor in Trump’s strategic priorities as how he is going to deal with these changes. The BRICS countries will remain central to this debate on de-dollarisation and how Trump’s policy on tariff would alter the economic dimension. Trump would require to be cautious and not initiate anything in a hurry which will make a second trade war with China imminent, having global ramifications.
The question arises whether Trump understands both geopolitics and geo-economics and if he does then his rhetoric on China and other allies must be guarded and measured. Otherwise, his strategic priorities will not help him accrue dividends. A couple of weeks ago, China has banned the export of several critical minerals to the United States in response to the Biden administration’s efforts to cut off China’s development of advanced semiconductors. All these might make a negative impact on US economic growth and obviously drive up inflation.
Trump’s recent pronouncements of tariffs on many other countries (Mexico, Canada and India) will never augur well with US interests. His actions will invite retaliation from trade partners and that will make everything worse for the United States. Trump should focus more on exploring the mechanism for enhancing growth and also strengthening the dollar as a part of his strategic priorities.
Tariff in the real sense has become Trump’s favourite foreign policy tool, but he should be made aware by his key policy advisors that such instrument will produce counterproductive results and will never solve economic problems with China. China is currently ahead in 7 of the 10 advanced industries globally. The way things have unfolded in the recent times it is going to be difficult for the United States to completely eliminate dependence on China in a number of critical areas including electronics, steel and pharmaceuticals.
How to become less dependent on China might form a part of the debate when Trump evolves US strategic priorities. US-Taiwan relations need to get strengthened and more overt gestures on the part of the US might dissuade China in enlarging its footprints elsewhere in the world. China’s approach to the South China Sea is becoming more intimidating not only to the Philippines but all the countries across the Indian Ocean littorals, South Pacific and Indo-Pacific Region (IPR). The IPR obviously will feature prominently on Trump’s radar and how he will help strengthen the efforts of the Quad countries (US, Japan, Australia and India). His approach to the Korean Peninsula will not be different. He might push for a negotiation with Kim Jong-un again, though Kim has declared the toughest anti-US policy recently. It is not going to be easy with Kim to negotiate.
Multilateralism will also remain dominant in Trump’s strategic priorities and obviously it should be based on inclusivity, equality and cooperation. But how to balance the US old approaches to the multilateral financial mechanisms such as IMF and the World Bank with the newer demands and requirements of the Global South countries will put more questions to Trump than having solutions for these. On climate change issues, Trump will have to change his stances if he really believes “multilateralism” as a means to usher in a prosperous and peaceful world. Trump during his first term had withdrawn from the Paris Agreement and also spearheaded a broad reduction in environmental regulations, rolling back nearly 100 federal rules including requirements to reduce methane emissions. In fact, Trump should learn from India how to reduce the dependency on the use of fossil fuels and decrease the increasing concentration of greenhouse gases in the atmosphere. Trump will be banking on India for solutions to many of the global problems. India and the US together can solve all the major problems of the world.
* Dr Arvind Kumar is Professor of United States Studies at School of International Studies, Jawaharlal Nehru University, New Delhi.