The Ripple Effect of 'Trump 2.0' on Global Economic Stability

Fri Mar 14 2025 15:45:28 GMT+0200 (Eastern European Standard Time)
The Ripple Effect of 'Trump 2.0' on Global Economic Stability

As Donald Trump re-enters the political scene, financial experts weigh in on how his potential tariffs could reshape the global economy in 2025.


Economists warn that the anticipated return of Trump may usher in new tariffs, complicating global trade and economic growth, particularly for nations reliant on the US market. While the US is set for cautious growth amid lower interest rates, the global economic landscape remains precarious, especially for trade partners like China and Canada.

In 2025, the global economy is poised for a "stable yet underwhelming" growth of 3.2%, as highlighted by the International Monetary Fund. The year is set against the backdrop of potential new tariffs from Donald Trump, which could have profound implications for international trade, inflation, and interest rates.

A recent interest rate cut in the US brought some relief to American consumers, but stock markets reacted negatively after Federal Reserve chair Jerome Powell cautioned against further cuts in the near future, as the central bank continues to battle inflation. Despite a slowdown in price increases attributed to past economic shocks, inflation metrics in the US, UK, and Eurozone still hover above target levels, indicating ongoing challenges for financial regulators.

JP Morgan's Luis Oganes noted the crucial uncertainty linked to Trump's re-emergence and the specter of protectionist policies, particularly new tariffs targeting key trading partners—China, Canada, and Mexico. While some economists argue that US manufacturing could temporarily benefit, the potential broader harm to international economies cannot be overlooked.

Former IMF economist Maurice Obstfeld raised alarms about how disrupting supply chains—exemplified through the auto industry—could ripple through the economy, leading to higher consumer prices and decreased business profitability. The impacts on Mexico and Canada could be especially severe given their heavy export reliance on the US market.

In response to these uncertainties, President Xi Jinping of China emphasized the importance of navigating external challenges as the country aims for stability in its growth trajectory. China's economy faces significant hurdles with sluggish domestic consumption affecting its export-driven model, compounded further by trade tensions and rising tariffs.

Global trade battles are increasingly centering on sectors like electric vehicles, where tariffs imposed by the US and its allies could alter international supply chains and foster economic discord. The European Central Bank's Christine Lagarde cautioned against protectionist measures, which could counteract growth and exacerbate inflation.

Europe's own economic engines—Germany and France—are struggling amidst internal political instability, posing additional risks to the eurozone's recovery. In the UK, soaring prices driven by tax increases and wage hikes are expected to compound economic stress.

As Donald Trump prepares to implement a range of economic strategies upon returning to the White House, there is speculation regarding tax reforms and regulatory rollbacks that may boost the US economy. However, lingering questions about the international repercussions of such policies remain. With global economic conditions intertwined, the policies adopted by the US will significantly influence worldwide growth and stability in the years ahead.

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