The News
Investors and world leaders are preparing for a return of Donald Trump to the White House, a prospect that appears to be concretizing in light of US President Joe Biden’s flailing reelection campaign.
Investors are placing their bets on Trump’s economic agenda, and world leaders, including NATO officials, are bracing for the potential sea change that Trump’s America-first approach may bring to global geopolitics.
SIGNALS
Investors are betting on tax cuts and more tariffs
Wall Street is placing bets on what a Trump return would mean for the economy, triggering a selloff of US government bonds. The heavy tax cuts the GOP candidate has promised may increase deficits and inflation, while new tariffs are likely to have “an uncertain economic impact,” also potentially adding to inflation, The Wall Street Journal wrote. But while policy changes are expected under Trump, it remains to be seen how far they’ll go, Politico noted, citing Goldman Sachs economists, and “multiple sources of uncertainty remain,” especially if a new Democratic candidate ends up replacing Biden.
Trump’s return would ‘transform Europe’
The prospect of a second Trump mandate is filling NATO officials with “despair,” the Financial Times reported, as Politico noted that the former US president’s allies are already considering a “radical reorientation” of the organization, putting much more weight on Europe. Trump’s America-first approach to security is making the likelihood of a post-American Europe “ever more thinkable,” a global affairs professor wrote in Foreign Policy. Europe would change radically in a post-NATO world, he argued: “It is devilishly hard to coordinate collective action among dozens of countries with distinct interests and cultures, unless someone is gently knocking heads together.”
Global leaders want a ‘smooth transition’ if Trump returns
In preparing for Trump’s potential return, diplomats are “eschewing anxiety” and focusing on where they succeeded in working with him in the past, The Hill noted, with some senior officials continuing to nurture relationships with Trump and the security professionals around him. The newly-appointed NATO chief, former Dutch Prime Minister Mark Rutte, has earned the nickname of “Trump whisperer” thanks to the good rapport he built with Trump last time round. Rutte could “repeat the trick” if Trump returned to office, Semafor’s Mathias Hammer wrote. Overall, there’s optimism internationally for a smooth transition in case of a second, “likely chaotic” Trump term, The Hill added: Some countries have even lobbied Republicans at the state level to mitigate potential Trump policies, like punitive tariffs on EU goods.