by Miguel Jiménez, Ingrid Heggstad, & Dan Ziebarth - Political Economy, Development, & Energy Security Team

Introduction

It was announced on Tuesday, November 5th that Donald Trump, the candidate for the right-wing Republican Party, had won the 2024 Presidential Election in the United States of America and would officially become the President-Elect. Kamala Harris, the left-wing Democratic Party candidate, conceded defeat in a speech on Wednesday, December 6th, urging voters to accept the election results. While Harris and her vice presidential running mate, Time Walz, received significant party support ahead of the election and were seen as a new phase for the Democratic Party, the party will be weakened following the election results. Even though during the campaign she lacked a compelling economic narrative and often avoided answering how to fund  any proposal she brought to the table, in terms of global economic relations, a Harris presidency was expected to maintain continuity with the current Biden administration's approach largely.

The second Trump presidency is expected to have major ramifications for global politics, particularly global economic relations, particularly as Trump has been a vocal proponent of protectionist trade policies. The Republican Party, led by Trump, will also control both chambers of the legislature, while conservative justices make up 6 of the 9 seats on the Supreme Court of the United States. These conditions could give Trump a strong mandate for policy change. In particular, economic relations with China, the European Union, and Russia are expected to be affected by a second Trump presidency.

China

Trump has announced that, if re-elected, he will impose a 10–20 per cent across-the-board tariff on imports into the United States, with an additional 60 per cent tariff on all imports from China. Trump has also pledged to terminate the Inflation Reduction Act (IRA) passed by the Biden administration, which would be expected to increase domestic production and reduce Chinese imports. This is in contrast to what would have been expected under a Kamala Harris administration, where the usage of tools to inhibit the arrival of Chinese goods would have come from domestic policies with the continuation of the Inflation Reduction Act (IRA), the single largest climate investment in American history. Based on building domestic champions in the field of energy transition, which is currently dominated by China, being the world’s leader in clean energy production and the refinement of the majority of mineral inputs. 

European Union

The second Trump presidency could challenge Europe through an “America First” trade policy, focused on reducing the U.S. trade deficit, with tariffs as high as 20 per cent on imports and even more on Chinese goods. These tariffs would increase costs for European exporters and consumers, impacting the EU’s economy. Ongoing disputes from the Biden era, such as steel and aluminium tariffs and green subsidies, may also escalate, while the expiration of paused EU retaliatory tariffs in 2025 and the Airbus-Boeing subsidy conflict in 2026 could further strain EU-U.S. trade relations, adding to Europe’s economic uncertainty. It is noteworthy that during his tenure as president, Donald Trump's imposition of tariffs on steel and aluminum imports from the European Union and China resulted in the implementation of retaliatory tariffs on U.S. agricultural products.

Russia

A renewed Trump presidency could also impact global economic relations with Russia. In his 2024 campaign, Trump promised to swiftly resolve the Ukraine conflict, asserting he could achieve peace within 24 hours through negotiation.  However, if Russia resists a settlement, Trump has signalled he would impose tougher economic sanctions, potentially targeting Russia’s central bank and curtailing energy exports to key markets like India and China. This intensified economic pressure, coupled with increased US energy production to lower global prices, would squeeze Russia’s vital oil revenue. 

Additionally, Trump’s scepticism toward ongoing US aid to Ukraine, which has amounted to $92.7 billion since 2022, raises concerns over a potential reduction in support, which could compromise Ukraine’s defence and shift the regional balance in Russia’s favour. Trump has also suggested that Europe should shoulder more responsibility for its security, which may lead to a reevaluation of US commitments to NATO. It is possible that a reduction in the US role in NATO could have the effect of weakening collective defenses, which might in turn expose Europe to greater tensions with Russia. This approach indicates a shift toward a more isolationist US foreign policy, with strategic economic measures as leverage to influence Russia's actions.

Additionally, Trump’s expected policies in oil and gas could intensify competition with Russia and reshape global energy markets. Russian oligarch Oleg Deripaska has predicted that Trump’s support for US oil production might drive global prices down to around $50 per barrel by 2025, creating pressure on Russia’s oil-dependent economy. Trump’s approach would likely include promoting US LNG exports, reviving paused projects, and further challenging Russia’s position in Europe’s energy market. 

His stance on projects like the Nord Stream 2 pipeline, which he previously sanctioned to limit Russia’s influence, suggests he might continue efforts to curb Russia’s global LNG ambitions while supporting policies to maintain affordable oil prices for US consumers. By influencing OPEC+ to stabilise prices favourable to the US, Trump could further impact Russia’s revenue, potentially reducing its leverage in Europe and heightening competition in the global energy sector.

Conclusion

Taken together, based upon a previous presidency led by Donald Trump and his recent claims on the campaign trail, global economic relations could become increasingly tense between the United States and other nations and political unions.

In particular, trade relations between China and the United States are expected to worsen, with major increases in tariffs on Chinese goods entering into the United States possibly leading to retaliatory tariffs and an intensification of trade competition between the two countries. The European Union could also be affected by the competition between the United States and China, as well as the possibility of increased tariffs on goods from the EU going into the United States. The conflict in Ukraine also casts a shadow over Trump’s second term and whether the Trump administration continues to provide funding to Ukraine and keep sanctions on Russia in place will affect both the war in Ukraine, as well as economic relations between the United States and Russia.

These considerations will all have ripple effects across the entire world, meaning it is important for policymakers, scholars, and citizens alike to continue watching the effects of the second Trump presidency on global economic relations.