# Trump 2.0: Implications for the Global and Thai Economies

- Link: https://www.thailand-business-news.com/economics/174166-trump-2-0-implications-for-the-global-and-thai-economies
- Published: 2024-11-11T09:35:00+07:00
- Author: Boris Sullivan

**Donald Trump has won the election as the 47th president of the United States and
will return to the White House**. In addition to winning the presidential election
by a landslide, the Republicans of Trump’s party also hold majorities in both the
House of Representatives and the Senate.

**Trump has a protectionist policy that will accelerate geopolitical problems and
emphasize energy security more than reducing global warming.** Important policies
that Trump mentioned during the campaign include:

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(1) increasing import tariffs on Chinese goods by 60 pp. (percentage point) and 
other countries by 10 pp. (

2) blocking foreign immigration into the United States by banning and expelling 
illegal border crossers, restricting legal border crossings, and delaying visa approvals
to enter the United States;

(3) making US allies more military-reliant by reducing US funding for defense of
Ukraine, Japan, Taiwan, and South Korea;

(4) emphasizing energy security over solving climate change problems by continuing
to support oil drilling; and

(5) reducing corporate and wealthy income taxes, which will cause the US government
to have a fiscal deficit and more debt.
**A Republican sweep election result like
this will allow Trump to push through a number of policies** (even though he may
actually use these policies as a bargaining chip with other countries and may not
fully implement them), **which would have a negative impact on US trading partners
and create more uncertainty for the world.**SCB EIC has analyzed the impact of Trump
2.0 policies on the global and Thai economies, using a set of US policy assumptions
based on the latest analysis by the International Monetary Fund (IMF) in the World
Economic Outlook (WEO) report for October 2024 to calculate the impact on the Thai
economy through trade and investment channels, so that those interested can prepare
to plan to cope with the impacts and uncertainties that may arise in a timely manner.

## **Impact on the global economy**

**IMF (WEO Oct24) sets Trump 2.0 policy assumptions and studies impact on global
economy** through 5 channels:
**(1) Import tariff policy** : The United States, 
Europe and China increase import tariffs between each other by 10 pp. and the United
States collects import tariffs on goods from other countries by 10 pp. with other
countries retaliating by increasing import tariffs on their goods. The affected 
goods cover 25% of the value of world trade, accounting for more than 6% of the 
value of the world economy. It will begin to have a negative impact on the world
economy from mid-2025, resulting in a total decrease in the world economic growth
rate of 0.3 pp. during 2025-2030.**(2) Uncertainty in global trade policy** : The
US import tariff policy and retaliation by other countries will cause uncertainty
in trade policy, which will affect investment, especially in the industrial sector.
Investment in the US and Europe will decrease by about 4% compared to the case without
this Trump policy, while China and other countries will be affected by about half
of the US. The global economy will be negatively affected from mid-2025 and the 
effects will gradually fade in 2027.**(3) Tax cut policy** : The US has extended
the corporate tax cuts or Tax Cuts and Jobs Act (TCJA) for another 10 years until
2034 after the previous measure expired in mid-2025, which will reduce US corporate
income taxes by a total of 4% of GDP during that period. The net impact on the global
economy will be positive by a total of 0.1 pp. during 2025-2030, mainly in line 
with the positive impact on the US economy, even though other economies will be 
negatively affected because they lose their ability to compete for investment compared
to the US.**(4) Immigration Exclusionary Policies** : The US and Europe are likely
to become more exclusionary towards immigrants starting in mid-2025, resulting in
a 1% and 0.75% reduction in the US and Eurozone labor force by 2030, respectively.
Given that immigration has historically been a major driver of the US and European
economies, it will have a combined negative impact on the global economy of 0.2 
pp. over 2025-2030.**(5) Tightening of global financial conditions** : Global financial
conditions are likely to tighten due to the negative impact and uncertainty on the
global economy and trade. US interest rates will rise in line with inflation and
higher government debt in various countries, especially in the US, which will result
in higher borrowing costs for government and private debt in various countries, 
with (1) Sovereign premiums in emerging markets (excluding China) increasing by 
50 bps (basis point), (2) Corporate premiums increasing by 50 bps in China and developed
countries and increasing by 100 bps in other emerging markets, and (3) Term premiums
increasing by 40 bps in the US and 25 bps in the Eurozone. The impact on the global
economy as a whole will be negative but will start to gradually fade in 2028.**According
to the IMF study above, the global economy will start to receive negative impacts
from the Trump 2.0 policy from 2025 after the policy package is gradually announced.**
The global economy will grow by 0.8 pp next year, and by 0.4 pp in 2026. However,
the global economy will grow by 0.2 pp in 2027 compared to the case without this
policy package, in line with the gradual decrease in trade policy uncertainty and
low base factors **. **

**Considering the overall impact on the global economy in the medium term, the Trump
2.0 policy package will reduce the global economic growth rate by 0.4 pp compared
to the case without this policy package**.

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**SCB EIC assesses that the impact of the Trump policy on the global economy is 
likely to be negative both next year and in the medium term** because the world 
will be directly affected by protectionist measures and various volatility, while
the positive impact of the TCJA tax reduction policy will occur only in the United
States **.**

**However, the impact on global inflation is still uncertain, depending on whether
the net effect between supply-side inflationary pressure increases and global demand
pressures slows down**.
**For the US economy, SCB EIC assesses that the net impact
of Trump 2.0 policies on the US economy next year is likely to be negative. However,
the policies are still highly unclear,** depending on the net impact of differences
in the timing and scale of policies that will benefit the US economy (e.g., the 
TCJA tax cut policy) and policies that will be detrimental to the US economy (e.
g., import tariffs, immigration restrictions), as well as trade retaliatory measures
from other countries. Furthermore, the policy package still has some uncertainty
in terms of timing. Initially, it is estimated that these policies will gradually
affect the US economy from mid-2025 **. **

**However, the impact of Trump policies on the US economy in the medium term is 
quite clear that they will be negative. In addition, the Trump policy package will
result in higher US inflation, which may cause the US Federal Reserve (Fed) to ease
interest rates less than previously estimated, and this** will further pressure 
the US economy.

## **Impact on the Thai economy**

**SCB EIC assesses that the Thai economy in the short term faces increased downside
risks from the Trump 2.0 policy,** mainly through impacts on trade and investment.
**(
1) Export of goods** : The US’s protectionist policies and widespread import tariffs
have put pressure on global trade to slow down, directly affecting Thailand’s export
sector.

(1) Thai exports to the US, a major export market for Thailand, will expand less,
especially for core products such as computers, electronics, and electrical appliances,
due to the direct impact of the tariffs, and

(2) higher import tariffs on Chinese goods to the US market, coupled with China’s
current unresolved overcapacity problem, have made it even more necessary for China
to find other markets to replace them. As a result, Chinese goods tend to flood 
into other markets, especially Thailand, which indirectly affects Thai manufacturers
to face more intense competition and further pressures the Thai manufacturing sector
to recover more slowly. **SCB EIC estimates that the value of Thai exports in 2025
will decrease by around 0.8-1 pp. due to the impact of the increased protectionist
policies.**
**(3) Investment** : Economic uncertainty increases due to Trump’s unclear
trade policy, which may cause investment to slow down. Foreign investors tend to
delay investment while waiting for clarity, so the relocation of production bases
to Thailand may not happen in the short term or may happen slowly. In addition, 
the risk of investment pressure will increase in the future, especially the relocation
of investment bases from the United States, which is at increased risk due to the
United States’ protectionist policy that also wants to attract more investment back
to the United States **. SCB EIC estimates that private investment in Thailand in
2025 will decrease by approximately 0.4 – 0.5 pp. due to increased uncertainty in
global trade and investment.****Overall, SCB EIC assesses that the impact of the
Trump 2.0 policy will pressure the Thai economic growth in 2025 to expand lower 
than the original trend.** The main reason is that Thai exports are pressured by
the slowdown in global trade volume and investment in Thailand that has not yet 
been able to fully benefit from the relocation of production bases from abroad. 
SCB EIC has assessed the impact of the Trump 2.0 policy on the Thai economy through
a model that links the impact of the global economy according to the IMF study (
Oct24) to the main channels of the Thai economy. It was found that Thai exports 
of goods and private sector investment will be the most affected by the increased
trade and investment barriers **.**

**The Thai economy in 2025 will decrease by approximately 0.5 pp. compared to the
original trend before the US election results**.
Although President Trump’s 2.0 
policies, especially trade and investment protectionism, will pressure the Thai 
economy to expand lower next year **, in the medium term, SCB EIC assesses that 
the impact of international protectionist policies in various dimensions will be
an important factor that will accelerate economic polarization. Thailand may benefit**
from the changing global trade pattern, where countries with different economic 
poles will rely less on each other in trade and turn to rely more on countries with
neutral stances. If Thailand can maintain its neutral role in the global geopolitical
game, it may benefit from trade and investment diversion from countries with more
polarization.

Source : [Flash / Trump 2.0 : ผลกระทบต่อเศรษฐกิจโลกและไทย | SCBEIC](https://www.scbeic.com/th/detail/product/trump-081124)