05 01 2025

What should the world expect from Trump?

Trump has said he will stop immigration and deport millions of unauthorised immigrants. The repercussions will be serious, both for the people concerned and the countries they are coming from. And for the US. Trump has said he will stop immigration and deport millions of unauthorised immigrants. The repercussions will be serious, both for the people concerned and the countries they are coming from. And for the US. http://www.ice.gov/news/releases/1109/110928washingtondc.htm

Despite his rhetoric, the new Trump presidency means more continuity than break with the Biden Administration. However, there are a few issues, where there may be a break with the past. One of these is the stop for immigration and deportation of ‘unauthorised’ immigrants. This will affect both the countries where the immigrants come from and the US itself.

Trump made many statements during his election campaign and often adding: ‘From day one’. Most of these concern internal US issues that are of little interest to the rest of the world as identity policies, child gender-change operations, trans-people in the army, firing of District Attorneys and the like. But because of the size of the US economy and the country’s military power, some issues have important repercussions for the rest of the world.

This concerns of course first of all US foreign policy. On most foreign policy issues Trump 2.0 is simply Biden 2.0: escalation of the hostility towards China, continuation of the unconditional support for Israel’s wars against the Palestinians and its neighbours, continued arms delivery to Taiwan, confrontation with, and perhaps even military attacks on, Iran, continued confrontation with Russia in Europe and Ukraine etc. The Biden administration required the European countries to take on more responsibility for NATO and the war in Ukraine, actually following the policy lines laid by Trump during his first presidency, and Trump 2.0 is likely to intensify that (which may, or may not, increase the chance for peace in Ukraine). Trump has threatened with leaving NATO, but it looks as simple negotiation tactics to make the European vassal states fall in line and pay up. Generally it is continuity. There are no radical breaks. Exceptions are the possible withdrawal of the US from the Climate Agreements (again) and from some UN organisations as WHO and UNESCO, and he may cut the funding for the UN and generally use the big stick to get UN to align more with US policy (than what it already does).

Perhaps as a preparation for the new and even tougher relations with the US under Trump, China has started hitting back. On January 3 they announced the adding of 28 US entities to the export control list, barring exports of dual-use items to the listed companies. This is likely to escalate in the coming years. Photo from Global Times.

When it comes to international trade and sanctions, the Biden administration actually continued the policy started by Trump during his first presidency, and intensified it. The US is still sabotaging the work of the World Trade Organisation by blocking the WTO Appellate Body, and Trump will continue that. The Biden administration not only continued Trump’s tax on imports from China, but increased them. And now Trump has promised to increase them further. The same goes for the sanctions against China, Russia and Iran. The US is presently sanctioning around a third of all countries in the world, most of them poor countries, and there is no reason to think Trump will change that. His threat to tax imports from the US allies Canada, Mexico and the EU is more likely negotiation tactics to get what he wants from them. So it will mostly be continuity, not a break.

When it comes to economic policy with repercussions outside the US, in most cases there is no sign of a break either. The US budget deficit is estimated at around 7% of GDP in this fiscal year, which is unheard-of in peace times, and Trump seems to be just as unconcerned about that as the Biden administration was. 'Just let the money-printing machine run!' Trump has promised to extend and broaden the tax cuts he introduced in 2018. There will come some extra revenues from the increased import levies, and Trump has promised cuts to some government programmes, among these the socalled Inflation Reduction Act which among others supports investments in clean energy and which Trump has vowed to repeal. But this is unlikely to be enough, so the deficit will continue or even increase in the coming years, and so will the unsustainable spiralling public debt. The world should worry and prepare for the worst.

But there are some issues, where there will be a break, if Trump walks the talks.

One is immigration. In 2022 there were 46.1 million immigrants in the US, which is around 14% of the total population (this has since increased to 51.6 million or 15.6% in 2024). In 2022, around a quarter of these (11 million) were ‘unauthorized’ (plus another 2 million with temporary protection, TPS). Trump has said that he will stop illegal immigration and start deporting the unauthorized immigrants who are already in the country – “from day one”. He will clearly not be able to do that, but if he actually deports a significant number of people and severely curtails the flow of immigrants to the country, it will obviously have serious repercussions for the countries the unauthorized immigrants come from, among these Mexico, India, Central America, and the Caribbean (reduction of the remittances and increasing the local pool of people searching for jobs). According to estimates by the World Bank, the remittances to Central America constituted in 2024 around 20-25% of their GDP so anything affecting these has of course a big impact. The absolute amount of the remittances is much bigger for Mexico and India, but as the countries are bigger, the importance for their economies is much smaller.

Immigrants constitute an important part of the labour force  in many sectors in the US, among these, construction, maids/housekeepers, cooks, home health/personal care aides, janitors, delivery drivers and agriculture. Photo: https://www.dol.gov/general/migrantworker

What about the effects on US itself? The present US economic model is built on an inflated consumer demand supported by a high public budget deficit (profligate spending, low taxes), and a steady flow of cheap labour from abroad to avoid this demand leading to higher wages (‘Bidenomics’). The most immediate effect will be that companies would have to compete for the workers, which should lead to higher wages and better working conditions, including for the immigrant population already in the US. The Trump agenda is ‘pro-business’ (deregulation, lower taxes for the big corporations and so on), but it may inadvertently improve conditions for low-paid workers. For sure, if it really hurts, the employers in the sectors, where most of these low-paid jobs are (typically construction, services, transport and agriculture), will protest and require the government to open up for immigration again. In the Trump camp they have for example already started squabbling over the H-1 work visas for higher skilled workers, among these IT workers, as some of Trump’s supporters who need these immigrants (as Elon Musk) have required these visas to continue, while others (as Steve Bannon) want them to be cancelled.

A distinct characteristic of Donald Trump is his unpredictability. He is a billionaire and represents part of the governing classes in the US, but it seems he has not really been accepted into the glamorous establishment – and it looks as if that hurts him. Now tech moguls as Bezos, Zuckerberg and Altman, who have shunned him before, are lining up to support him donating millions to his inauguration, obviously hoping for favours from him. He has an oversized ego, his ideology is unregulated, free-wheeling capitalism, but he seems to dislike some of the established monopolies (for example ‘Big Pharma’). He may not be very intelligent, but he is sly. His political room for manoeuvre seems to be larger than during his first presidency, as he now has more supporters within the Republican Party, but he is still restrained by it, and he is also restrained by most of the Establishment, which still loathes him. All this makes it difficult to predict the direction of US policy the coming years.

But my guess is, as mentioned, that there will be more political continuity than anything else. Concerning peace and war, Trump may just be a little better for peace than Biden was. Or he may not. There are no guarantees.

 

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For those interested in immigration numbers there is an informative graph below (an immigrant is defined as a person that was not born in the US):

https://www.migrationpolicy.org/programs/data-hub/charts/immigrant-population-over-time

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Thorbjorn Waagstein

Thorbjørn Waagstein, Economist, PhD, since 1999 working as international Development Consultant in Latin America, Africa and Asia.

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