The ‘Trump’ Doctrine & Its Global Economic Effects

‘During the 21st century, when America sneezes, the whole world catches a cold’

On 6th November, for the Indian time zone, not only Donald Trump crossed the required majority to establish the Presidency but also the Republicans formed a supermajority in both the Congress as well as the senate. The election results at that point of time were the most discussed topic in the entire world and whether or not you were celebrating or just mortified by the results, they are sure to leave echoes throughout the world. There were several policies which the 45th US President brought in his tenure which acts as a precedent for all the policies he is gonna bring during his new tenure. These policies, though heavily reversed by his formal political rival Joe Biden during his tenure, seem to be brought back by Mr. Trump along with many others following his ideology with strong intentions and even stronger implications. With this Article, we will explore the different parts of the soon-to-be new Trump Doctrine and the ripples it will leave throughout the world.

Trump and War-Economics:

Donald Trump from his very first campaign towards the presidency has vouched for ending all wars on the planet, though there has been much difference in what he says and what he actually does, this particular campaign of his was a very highlighted promise which the rivals were not able to deliver. Trump’s stance on the war particularly towards the Israel-Palestinian and Russian-Ukrainian may help us see a quick end towards the war or at least funding-cut for weapons. The policy may even backfire and lead to even further escalation or destruction in the respective frontiers. In such a case, Trump may more radically request nations to choose a side which will of course have a huge impact on global trade. He may also just give Ukraine a cold shoulder or broker a peace deal and slowly start peeling off the sanctions and tariffs imposed on the country of Russia which will open the markets of Europe to Russia’s energy supply and the world’s to many other commodities which Russia is a leading producer of, which may just turn out to be economically beneficial for the world, though the popularity of this decision will be highly contentious. Noting further, the trade of defence equipment is only going to soar, as we saw during the last tenure. One thing which remains certain is that the world of geo-politics particularly with regards to the wars currently waged will change very dynamically. The trade of arms and ammu-nations (ammunition) will increase towards the third world countries as it did by a margin of 15% during the last tenure. We might also see sanctions and trade tariffs come into play with the “unfriendly countries” as per the CATS (Countering Adversaries Through Sanctions) Act. In conclusion, we may see a plethora of events happening, be it markets opening again or their sanctioning or the solidification of the already reinforced US position in arms-trade during the new tenure of Mr Trump. A consequence of this policy may also lead to mass-proliferation by countries which can have severe consequences for global peace and security as well as rise of tensions across many frontiers .

Trade War & China:

At one point during his tenure, we could say Trump’s most used words were “trade” and “China” and it would be so because of the presence of a new alternative to the cold war we witnessed at the time, the trade war. This alternative appeared because in the last decades China has grown at a pace one cannot fathom and of course with its supremacy challenged, the Americans felt threatened. The problem with China was that it had already become the factory of the world and could not just be filled with embargoes and sanctions so therefore, it was used. The war was waged during early-2018 when Trump posted tariffs worth USD 360 Billion Dollars on China with the rates raised to 25% on more than one-third of the imported products. Few of Trump’s policies on China were reversed (excluding the tariffs) by the Democrats and relations with China cooled down but again with this last tenure as a precedent and not much discussion on this topic, it can be said a similar trade war will be repeated. Beijing itself was left in shock with the results and can be said bracing for what’s about to come. Furthermore, China’s influence has been growing consistently in Europe and Africa and we may as well soon see a foot coming from the North American continent to stop this. Many companies shifting their operations from China due to the trade war but stopped after relations cooled down may even start doing so again. We might see more countries emerging to capitaliSE on the trade war again. Although Xi Jinping said that they will work together, the truth in this statement cannot be pieced together as Trump promises to raise these tariffs even higher (60%). While the trading is on a bilateral level, this may have very drastic consequences for the global economic health and trade. Another possible happening is that USA may like to remove China’s golden status of MFN (Most Favoured Nation) in trade whose consequences for China will be drastic as it will increase the taxes to be paid on China but can be advantageous to China’s trading rivals like India and Vietnam who may have their goods enter foreign market at cheaper rates.

USA’s own backyard- NATO:

When we discuss the condition of Europe, in particular NATO, we see that they have warmed up to China as an ally, especially for replacing the energy and other resources they stopped importing after sanctioning Russia. However, this according to me, will also change as soon as Trump takes the throne at the White House. Seeing Trump’s stringent anti-China policy, he will also urge the countries to take a bold stand against China. This step, if taken will highly benefit the south-east asian countries as the capital accounts of their balance of Payment will see a huge credit amount standing, though this step may not be very appreciated by the respective countries. Trump has usually called out the countries of NATO for being US-dependent and will most

likely urge them to change that too by encouraging arms trade as in his past Government, he set a standard for defence budget which at the current time, only Poland is able to meet. Moreover, the trade policies of Europe may change more dynamically as we see a rise in right-wing parties throughout Europe. The whole trade change may just be a forecast but seeing the conditions and the trends of Government, it holds a high possibility. The United States may also increase multilateral trade deals and projects with the countries. Another consequence may be hostility between the countries which may turn out disastrous for the USA as they cannot afford to make hostilities in their own backyard.

The Resource Factories- Gulf and Africa:

The American policies towards the African and Gulf countries have been said to be weak and inefficient for much duration as can be seen with African countries aligning with China and USA’s main gulf allies like Saudi Arabia shifting away from it. Now, with Trump’s return these can change and will definitely change. With Gulf countries, we can see furthering of existing alliances in the form of a sequel to the Abraham accords and more activity from I2U2. These alliances’ main objectives were to secure US interests in the region and counter China’s. Moreover, these alliances would also normalise Israel as a trading partner for the gulf countries while also countering the trend of Iranian hostility particularly in the Strait of Hormuz. Moving on to Africa, the Trump Doctrine here supports bilateralism over multilateralism and as a result we can see a number of individually targeted bilateral treaties and agreements particularly to curb the growing Chinese influence in the area. We can see a number of bilateral deals happening and growing trade between the USA and Africa. There will be two negative influences though as according to many reports, Trump may not renew the African Growth and Opportunity Act which allowed African countries to sell their produce in the US without taxes. He may also pull back from the Lobito Project as it does not support the America First idea but benefits the African countries and may turn out to be disastrous.

Possible Impact for India:

There exists several boons as well as banes when we talk about the onset of Trump’s Policies. With the biggest boon being Trump’s Anti-China policy especially with trade. This policy creates a gap in the market which the Chinese goods initially used to fill before these tariffs and this gap can easily be capitalised by any country looking to diversify its manufacturing and of course one of them is India. Particular industries which will get the biggest boost are Automobile and Electronics. It can boost India’s goal to replace China as the World’s Factory as it will have cheaper goods to offer in the market. A second boon would be the infrastructure policy of Trump which is going to see major upgrades and with India as one of the biggest exporters of Steel, Engines and Auto-parts to the United States can be a big boost to the Indian Companies and an opportunity to increase forex. While we see the advantages, Trump’s policy towards Pharmaceuticals will be a huge thorn for us as 31% of our pharmaceutical goods land in the USA. Trump’s policy focuses on reducing the price of medicines which at one point were 5 times that of any developed country. He is looking to impose a price ceiling for the medicines similar to how he did to insulin during his last tenure. This may turn out disadvantageous for Indian companies as they were selling because their prices were low but with all companies selling around that price, it will increase competition for them. Another point which may be seen both as a bane as well as a boon is his immigrant policies as he makes getting H-1B and other work and study visas difficult to obtain, it will limit India’s brain drain towards its largest contributor saving many talented engineers and other professionals whose services may positively affect IT and many other industries. At the same time, it will also lead to heavy unemployment in the domestic market and make things even worse for the already present professionals who will now face even more stiff competition.

Conclusion:

To conclude, we can say that the Trump administration is about to bring in a ton of changes for the global economy and the policies may turn out to be both extravagant or disappointing but that only time can tell, one thing is for sure that the tenure of the 47th US President will be one lacking no political or economic chaos. While the America First policy operates, there will be significant changes throughout the political and economical landscape of the world.