The world market was already under pressure as a result of Donald Trump’s victory in the November election, which also included a sluggish Europe, an ugly conflict in Ukraine, and a sluggish Chinese market. However, there was a chance that lower interest rates may encourage economic activity and the global economy in 2025 as central banks began to control higher inflation.
Trump’s triumph, however, has a number of reasons to doubt those expectations. The world’s largest economy’s economic policies are under a lot of new confusion, as is how Trump’s extreme rhetoric toward China will actually work.  ,
Trump emphasized three monetary steps on the plan trail that appear more certain than others to be put into practice.
The first is density deportations of illegal immigrants, a round-up that will dent the US’s labour supply with negative consequences for progress and prices. The second is a business income reduction, which will increase the already large US fiscal deficit and national debt but will also encourage more capital to be raised.
Trump plans to increase trade taxes across the board, but to the evident greatest extent against China, in a second and more significant way for the global economy. Given all of these actions’ inflationary effects, it seems obvious that the US Federal Reserve will need to be watchful for any potential spikes or overly sticky prices.
Due to Europe’s surprisingly depressed economic situation, this risk is rarely present in that country. That in turn indicates a weaker euros in the upcoming year as the European Central Bank will be more willing to cut interest rates.  ,
In other words, it seems exceedingly improbable that the fantastic dream of a quick standardization of US monetary policy and, with it, a weaker US dollar, would lead to better global financial conditions. Many developing and emerging markets with access to additional funding are particularly concerned about this Trump-driven transition in world economy expectations.
Given the unhappy financial climate in France and Germany and the good effects it would have on the eurozone’s profitability abroad, a weaker euros may be good news for Europe. That’s especially true as Trump’s taxes will also probably pin the European Union, though to what level is very questionable.
Trump’s primary tariff statements since winning the election, which targeted the US and Mexico ( to be hit with 25 % of US tariffs despite having a trade agreement with the US), may serve as a consolation for the EU that allies and friends won’t become immune to Trump’s tax assault.
Another important issue is whether Trump may impose more severe sanctions on nations that import Chinese goods for US distribution as made in their own countries, including but not limited to Vietnam, Malaysia, and Thailand.
This, among other factors, will decide whether the rest of Asia will be a relative “decoupling” success from Trump’s taxes, as has been the case with the Biden administration’s limits on China trade.
Trump’s plan to reduce US business income and the effects that will have on the relocation of US multinational profits are another important factor. More money will likely flow to the US from Asia as a result of this resettlement.
The Inflation Reduction Act, which granted grants to a limited US-based companies, has already done so. In other words, Trump’s tax plan could leave the US as the most appealing location for squandering international funds, with adverse effects for Asia and Europe.  ,  ,  ,  ,  ,  ,  ,  ,  ,  ,  ,  ,  ,  ,  ,  ,  ,
Beyond ramped-up US protectionism and business tax cuts, both gross negative for the rest of the world, Trump had accidentally make another major problem for the world economy, especially the dollar’s collapse as the globe’s reserve currency.
Trump has repeatedly stated he craves a weak money to reduce the enormous US trade deficit, despite the fact that these three hooks of his monetary policy mentioned above may eventually enjoy the money, which is how the market responded following his victory.  ,
Within Trump’s world of financial experts, there are voices proposing capital controls, which would be unthinkable of for the world’s supply money. Trump has simply added more complexity by making it seem as though Trump has just threatened BRICS people with 200 % taxes if they decide to de-dollarize their business and finances.
But the rhinoceros in the room is Trump’s program for China. On one hand, Trump has been fiercely aggressive toward Beijing, threatening 60 % tariffs on all Chinese-made products.
In a December 2019 alliance that gave China the right to purchase$ 600 billion worth of US goods and grant them preferential access to US buyers in some highly desired areas of its economy, Trump showed a commitment to strike a deal with China.
The EU may care a lot about how Trump handles China. For Western companies looking to do business with China, a new US-China trade agreement that is comparable to the one from 2019 is likely to be a net negative. Importantly, the 2019 offer saw Western businesses lose market share to American types in China.
All in all, Trump’s 2025 appearance does bring with it a quantum jump in worldwide economic uncertainty.
Trump’s guaranteed taxes and tax breaks could lead to a new rise in global inflation, worsening economic conditions for developing and emerging markets, and more inflows of cash from Asia and Europe into the US, but the effects of these measures on the money and US-China relations may be felt everywhere.
Alicia Garcia Herrero is an adjunct professor at Hong Kong University of Science and Technology and a senior researcher at the Bruegel think tank.