Muhammad Ayub Ali :
The victory of Donald Trump in the US election will not only influence the growth of the world’s largest economy but also have spillover effects on the global economy, experts say.
Trump’s potential re-entry into the White House, coupled with his threat to impose tariffs on all imports to the United States, highlights a significant challenge for the global economy.
According to Euromonitor International, Trump’s victory will shape the US’s future fiscal, monetary, and trade policies, which, in turn, will influence the growth trajectory of the world’s largest economy and have ripple effects globally.
The world may face increased global fragmentation due to Trump’s “America First” trade agenda, which includes setting universal baseline tariffs of 10-20 percent on most foreign goods, as well as a 4-year plan to phase out Chinese imports of key goods.
Such abrupt shifts in US trade policy could escalate trade conflicts, particularly between the US and China, while catalysing economies to further divide into geopolitical blocs, leading to a more fragmented global economy.
Following Trump’s victory, the US dollar has surged by about 1.5 percent against major currencies, including the pound, euro, and Japanese yen. In Japan, the benchmark Nikkei 225 stock index rose by 2.6 percent, while Australia’s ASX 200 closed 0.8 percent higher. The major US stock indexes are also expected to open sharply higher, with the Dow Jones Industrial Average, S&P 500, and Nasdaq all closing more than 1 percent higher on Tuesday.
Additionally, the value of Bitcoin jumped by $6,000 to a record high of $75,371.69, surpassing the previous high of $73,797.98 seen in March this year. In mainland China, the Shanghai Composite Index ended the day down 0.1 percent, while Hong Kong’s Hang Seng dropped by around 2.23 percent.
Impact on China, Europe, and the Rest of the World
Although the US industrial policy may be inward-looking, it has clear consequences for the rest of the world. China, after decades of mostly export-based growth, now faces massive industrial overcapacity. The country is working to encourage more domestic consumption and diversify its trading partners.
Europe, despite tight budget constraints, spends considerable amounts in the subsidy race. Germany, for instance, facing sluggish growth and doubts over its industrial model, is committed to matching US subsidies. It recently offered €900 million to Swedish battery maker Northvolt to continue production in the country.
Such subsidies are putting strain on the global economy and could have been better allocated to address urgent needs, such as the electrification of Africa with solar panels and batteries. Meanwhile, China has replaced both the US and Europe as the largest investor in Africa, driven by its own interest in securing natural resources.
Impact on Bangladesh’s Economy
Bangladesh’s economy has faced tremendous challenges, particularly after the fall of the Hasina-led government, especially in the banking sector, which plays a key role in the economy.
Dr Zahid Hussain, former lead economist at the World Bank Dhaka Office, said that Trump’s tightened migration policy could be a mixed blessing for Bangladesh. With stricter immigration policies, it will be more difficult for Bangladeshis to migrate to the US. He further noted, “Bangladesh will need more time to adapt to Trump’s policies, which may have a negative impact on trade due to his ‘America First’ agenda.”
He also emphasised the need for Bangladesh to secure the Generalized System of Preferences (GSP) advantage in the American market as soon as possible, though he acknowledged that achieving this would not be easy.
Economist Dr Moinul Islam remarked that while there would be no immediate change in Bangladesh’s economy following Trump’s victory, the ongoing trade war with China could negatively impact the global economy, with potential ramifications for Bangladesh as well.
In summary, while the direct impact of Trump’s victory on Bangladesh’s economy remains uncertain, the global economic implications are expected to be significant, especially with respect to trade policies and geopolitical tensions.
