Unpredictability of the POTUS Donal Trump was expected to come to the fore in Trump’s second presidency, but surprises are cropping up periodically. From the posts on X like “F**k Biden” during electioneering, Trump later saying General Mark Milley should be shot, withdrawing from WHO and having a rethink are but few examples of what is being called ‘Trumpism”. A recent development is Mexico denying landing permission to a US military aircraft carrying deportees. 22 States are against Trump cancelling birthright citizenship, a Washington federal district judge has blocked this Trump move as of now, a Pennsylvania attorney general is looking to re-arrest Capitol Hill rioters pardoned by Trump, and reports are emerging that Trump is surrounded by the Establishment; the Senate, House, judiciary, media, Wall Street and corporations, CIA, FBI, civil service and universities.
In addressing the World Economic Forum at Davos recently, Trump’s message was clear, while calling it the ‘Golden Age’ of America - the most consequential election victory in 129 years: the US accumulated $8 trillion in wasteful deficit spending on last four years; the US has the largest amount of oil and gas of any country on Earth, and they are going to use it; will pass the largest tax cut in American history; his message to every business in the world is very simple - make your product in America, and they will give you among the lowest taxes of any nation on Earth, but if you don’t make your product in America, you will have to pay tariffs which will direct billions/trillions of dollars into the US Treasury.
No doubt there is much more in Trump’s message to the World Economic Forum, plus questions/answers and Trump’s remarks on EU’s VAT and the like. But this is about the changes that the global economy is likely to witness due to Trump’s actions. Interestingly, Joe Biden’s war on Russia using Ukraine as the proxy brought inflation and recession in Europe, even forcing some industries and businesses to shut shop. Now Trump aims to ‘industrialize’ the US, whose industry for decades is linked to war. What can he achieve in the next four years only time will show. It is amusing to hear some views in India that Donald Trump is following the model of Indian Prime Minister Narendra Modi – Modi’s slogan of ‘Amrit Kaal’ to Trump’s ‘Golden Age’ and Modi’s ‘Make-in-India’ to Trump’s ‘Make-in-America’.

At the same time, while Trump wants to go full-throttle to industrialize the US, Indian industrialization appears hiccupping, with V Anantha Nageswaran, Chief Economic Adviser to Government of India, saying that India has made its manufacturing sector complicated for small and medium enterprises with onerous rules, adding, that land is subject to so many regulations that law-abiding enterprises are not able to use even 20-30 percent of it. He further said that exports depend on external demand and actions of the private sector, and policy should not stand in the way.
China’s manufacturing prowess was even more pronounced in 2023; at 30% of the global manufacturing added value. In 2024, China remained the top manufacturing country in the world contributing to 31.5% of the global output. The US is at second position contributing 15.9% of global manufacturing output, while India is at fifth spot contributing 2.9% to the global manufacturing output. How much of this can change in Modi 3.0 or Trump 2.0 remains to be seen. For example, after China announced curbs on export of industrial diamonds, Nazak Nikakhtar, former US Commerce Department official, pointed out that the US is late by “at least two decades” to reclaim the supply chain from China. These diamonds are essential for cutting tools; crucial for building, drilling, and manufacturing – affecting industries ranging from cars to aerospace and defence. According to the US Geological Survey (USGS), China produces 95% of the world’s synthetic diamonds.
Trump wants all the money taken out of America brought back. India has failed to do so despite political promises. Moreover, crores of INR are being regularly siphoned out of India by the corporate, businesses or individuals through fraud or otherwise. In September 2023, India’s external debt was pegged at USD 711.8 billion (increased USD 29.6 billion since June 2024) and external debt to GDP ratio at 18.45% (compared to 18.8% in June 2024). Indian bank’s total written off loans stood at INR 1.62 lakh crore, with banks recovering just about 16% of the written off amount; this according to analysts is due to the practice of the corporate funding elections.
During electioneering, Trump talked of imposing 100% tariffs on BRICS nations. To the World Economic Forum, he spoke of imposing tariffs on businesses, other than in the US. Separately, he has stated that tariffs on China could get sky-high, or be nothing at all, the deciding factor being whether Beijing is willing to come to the table and negotiate on Taiwan and trade. In a recent interview with the media, Trump announced potential tariffs of 10% on Chinese imports starting February 1, 2025 and mentioned levies could go as high as 60%. China has a massive balance of trade advantage with the US; in the first 11 months of 2024, Chinese exports to the US totalled about USD 401 billion, while China imported about USD 131 billion in goods from the US in the same period. Anticipating Trump imposing tariffs on China, US businesses have gone all out to stock Chinese goods.
To be fair to China, Beijing is well versed in trade, business and economic warfare. Despite global concerns like debt-trapping, China’s Belt and Road Initiative (BRI) is just one example of diversification; more than 140 counties, including many in the European Union (EU) have signed the BRI, which benefits China economically and strategically. It is axiomatic that China would have already prepared reciprocal sanctions/tariffs against such possible actions by Donald Trump. Some views have been aired in the Indian media that Modi would have also worked out such reciprocal sanctions/tariffs against the US; which is rather amusing looking at the tightrope walking Modi is doing balancing relations with China and the US.
India’s exports to the US increased by 5.57% to USD 59.93 billion during April-December 2024 due to strong demand in the US market, while imports grew by 1.9% to USD 3.77 billon in the same period. The IMF had predicted that the Indian GDP would grow at 6.5%, which is also the view of Chief Economic Adviser Anantha Nageswaran. But Trump’s tariffs on India are coming, including instructions to lower tariffs on Indian goods, which Trump has mentioned in the past. This would affect the Indian economy and its stock market. This, is notwithstanding the India-US equation, India being a Quad member, India importing billions of dollars’ worth of American arms and equipment, and the like; simply because Trump is focussed on filling up the US Treasury any which way.
Trump wants businessmen around the world to invest in the US. How much Indian businessmen (Adani, Ambani, Tata and the like) can invest in the US is not known but they certainly can’t beat Saudi Arabia investing USD 600 billion in the US and Trump wanting more; Saudis do have the incentive of Trump withdrawing from the Paris accord, dumping Joe Biden’s electric vehicles plan, and promoting petrochemicals.
Trump’s first presidency witnessed US tankers bringing oil to India – naturally at a high price. We may see more of this now while India can say goodbye to cheap crude oil from Russia (or oil from Iran) with Trump imposing high tariffs on Russian oil. In the past, India has not been affected much because of global recession because of availability of huge amounts of black money. This is still the case and in addition the country has the magic wands of the GST and the Production Linked Incentive (PLI) schemes. But while Trump’s sanctions and tariffs may not affect the government much, which continues to be impervious to the lowest ever INR vis-à-vis the Dollar, the Indian population (mainly middle and lower classes) will bear the brunt with the existing high-priced daily needs going through the roof. Also, with job cutting by the Trump Administration, remittances from the US could see a drastic cut. In 2023-2024, remittances from the US stood at USD 129 billion – 3.40% of GDP,
Finally, a Modi-Trump meeting could indicate what India should expect from Trump’s second presidency. For the present, Indian parents cannot meet their children living in the US.
The author is an Indian Army veteran. Views expressed are personal.