Mint Explainer: What Trump’s victory means for the US, India, and the rest of the world

Mint examines these policies and their potential impact on the US, India, and the wider world.

What could a second Trump term look like?

The most notable difference this time is Trump’s near-total control over the Republican Party, leaving no senior leader to challenge his policies, even if they seem extreme. Judging by his recent campaign rhetoric, the world may be in for a period of economic and political turbulence. 

Read this | A second Trump term is not good news—either for the US or the world

If Trump’s stance on import tariffs takes shape, a trade war with China seems likely, destabilizing an already fragile global trade order. His views on collective security threaten to weaken trans-Atlantic unity and deepen global polarization. Domestically, his plan for mass deportations could further divide the US. 

However, while Trump campaigned on similar nationalist themes during his first run, not all of his bold promises were realized in office. Will it be different this time? Some experts believe that while Trump’s campaign leans heavily right, his governance may settle somewhere closer to the political centre.

Could Trump trigger a new trade war?

Trump, who once called himself a “tariff man," imposed sweeping tariffs on imports of washing machines, solar panels, steel, and aluminium in his first term, setting off a trade war with China. This time, he has taken an even more aggressive stance, pledging a universal tariff of up to 20% on all US imports, alongside a proposed 60% tariff on imports from China and a plan to strip China of its most favoured nation status. If enacted, these measures could throw the global trading system into chaos and may also drive inflation in the US.

The Peterson Institute for International Economics, a non-partisan think tank, estimates that such tariffs would raise US household spending by $1,700 annually. Higher inflation could stall the recent monetary easing in the US and dampen economic growth. However, Trump’s supporters argue that the tariff revenues could fund significant tax cuts, potentially offsetting the impact on household budgets. Given that the U.S. imports $3 trillion worth of goods annually, even a 10% tariff hike would generate $300 billion for the federal government.

Trump’s supporters, however, argue that the tariff revenues could fund significant tax cuts, potentially offsetting the impact on household budgets. Given that the US imports $3 trillion worth of goods annually, even a 10% tariff hike would generate $300 billion for the federal government.

Read this | Trump or Harris? Economic volatility is another election result we can expect.

India may see mixed effects from this policy. While higher tariffs on Chinese goods could make Indian products like textiles more competitive, the downside is significant. Deprived of the US market, cheap Chinese imports could flood India, potentially hurting local industries. With a fragile domestic economy and a chronic property market slump, China’s redirected exports could pose new challenges for India.

What about Trump’s promise of mass deportations?

This isn’t Trump’s first pledge to deport large numbers of illegal immigrants—he made similar promises in his first campaign but largely left them unfulfilled in office. This time, however, the public sentiment appears more urgent, with 61% of registered US voters ranking immigration as a priority issue. During the campaign, vice president-elect J.D. Vance claimed there are 25 million illegal immigrants in the US, though the Department of Homeland Security’s latest estimate is closer to 11 million. 

Trump has proposed targeting 15-20 million migrants, beginning with an initial million. Experts caution that such a plan would be a logistical and financial nightmare: US Immigration and Customs Enforcement currently has the capacity to process only 30,000 people per month.

More here | Trump’s second term: Let’s hope his campaign was mostly rhetoric

A mass deportation could also create labour shortages, driving up wages and intensifying inflationary pressures. This would likely force the Federal Reserve to halt its recent monetary easing, stalling the US economic recovery.

Will Trump push for a weaker dollar?

Trump has long advocated for a weaker dollar to boost American manufacturing, arguing that a strong currency makes US products less competitive globally. A weaker dollar, however, would have ripple effects, impacting economies around the world, including India. For India, a weaker dollar would squeeze export profits and potentially reduce foreign investment appeal.

Yet weakening the dollar is no simple feat, even if Trump is determined. One approach would be to increase dollar supply, but that risks fuelling inflation—a concern for the Federal Reserve as it aims to rein in price pressures. Other tactics, such as selling dollars to buy foreign currencies or imposing capital controls, would come at a significant cost.

What could Trump’s approach mean for global security?

Trump’s scepticism of collective security could strain Trans-Atlantic unity, putting the North Atlantic Treaty Organization (NATO), largely funded by the US, in a vulnerable position. This raises questions about whether the US might turn more isolationist under his leadership. If so, how will China respond? A more assertive China could emerge, which would pose serious challenges not only for India but for global stability as well. 

The answers will unfold in the months ahead, but a hostile China is unlikely to benefit India or the broader world.