What might a Trump victory mean for the global economy?

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Though he rails against “globalists” and insists that his is an “America First” platform, Donald Trump — like the rest of us — very much lives in an interconnected world. Here, the actions of a single nation are inextricably bound together with other countries in ways both obvious and subtle. Trump likes to insist that other world leaders are salivating for the supposed global stability that would accompany his return to the White House in 2025, the truth of the matter is decidedly more complicated. As domestic economists debate the impact of the Trump campaign’s promise to levy extraordinary tariffs on all imported goods, international analysts are busy with their own calculations to determine the complex and cascading effects of a potential second Trump administration on global markets.

For his part, Trump has been characteristically fluid about the details of his economic plans, offering a host of broad and disparate recommendations largely featuring intense deregulation, lowered corporate tax rates, and the “most beautiful word in the dictionary”: tariffs. Nevertheless, the prevailing sentiment among those who make it their business to understand the nebulous world of nation-level finances is that a Trump economy would “lead to higher prices, larger deficits, and greater inequality” domestically, a group of 23 Nobel Prize-winning economists said in an open letter backing Vice President Kamala Harris’ domestic economic plan.

Globally, a second Trump term would “affect commerce multidimensionally,” the Financial Times said. Plans to enact “major shifts in the value of the dollar, the world’s reserve currency, would have consequences that stretch far beyond Washington.” Under Trump’s proposed economic policies, a “protectionist and smaller U.S. economy would be a drag on global economic growth,” University of Canberra Economist John Hawkins said at The Conversation.

Trump’s “fondness for tariffs,” a sentiment which “most economists do not share,” would be particularly harmful internationally, CNN said. Not only would tariffs “hurt global economic growth and drive up inflation in the U.S.,” they could do so overseas as well, “if other countries introduce higher levies on U.S. imports in response.” A return of Trump to the White House is the International Monetary Fund’s “elephant in the room,” The Guardian said. His second term, and the “undesirable” economic policies that he would enact “could reduce global GDP by 0.5 percentage points in 2026.”

Not only do economists argue Trump’s claim that consumers wouldn’t feel the effect of his tariff hikes is unrealistic, but his proposal might ultimately lead to a “sharp downturn in stock prices, particularly for U.S. multinationals that rely heavily on international supply chains,” said Time magazine. A plan to levy a “60% import tax on Chinese goods and 10% tariff on other imports” could potentially lead to a double-digit decline from the S&P 500’s “record” close of 5,792 earlier this month, Forbes said.

However, while Trump’s proposals taken in unison might hurt the U.S. economy, they’d be “benefiting most others around the world,” said the Peterson Institute for International Economics. Areas with “less U.S. trade would be less affected by the tariffs,” the D.C.-based think-tank argued. This, in turn, would “attract higher capital inflows as investors, reacting to the erosion of Fed independence, seek to invest in countries with less exposure to the United States, providing a boost to GDP.”

What next?

The “backdrop” to these arguments, said FT, is the current U.S. economy, which has proven particularly strong in these waning months of the 2024 election cycle. Particularly in light of Trump’s plans to gut the Federal Reserve’s independence, the next president should be “eager to build on what is currently a resilient economy” rather than undermining it, the outlet’s editors said earlier this summer.

Trump has argued that his tariff plan would not only bring in significant revenue but “increase production at home, create high-paying jobs and decrease inflation,” The New York Times said. But by enacting broad, universal tariffs, the ensuing “tit-for-tat” trade wars would “ultimately hurt every country by limiting trade, disrupting global supply chains, slowing growth and pushing up prices.”