The November US presidential election is a key event for the world economy and geopolitics. An extremely close race is expected between the candidates from the Democratic and Republican parties. According to a report by the Economist Intelligence Unit, Donald Trump’s possible return to office could cause radical changes in various policy areas, from trade to national security.
British economists have developed the Trump Risk Index (TRI), which assesses the impact of a Trump presidency on the 70 largest trading partners of the United States. The index uses quantitative indicators to measure risk in three areas: trade, immigration and security.
The main components of the TRI index:
- Trade and Protectionism (40%): Trump is likely to follow through on his intention to impose tariffs on US imports by proposing a flat rate of 10%. This could include additional punitive measures on politically sensitive imports such as steel.
- Security (40%): Trump could rebalance key defense relationships, increasing pressure on allies to increase their financial and material contributions.
- Immigration (20%): The Trump administration could increase funding for border protection and migrant deportations, and impose additional restrictions on international labor and education migration.
The most vulnerable countries:
- Mexico is the most vulnerable country with a score of 71.4 due to high impact on trade and immigration.
- Germany and Japan are also among the most vulnerable due to significant bilateral trade with the US and dependence on US security guarantees.
- Australia ranks second in the index due to its balanced security relationship and distant trade relationship with the US.
Low risk countries:
- Saudi Arabia is the least exposed to risk as its trade ties with the US have declined due to self-sufficiency in energy.
- Russia is also among low-risk countries due to the severing of ties with the US after the invasion of Ukraine.
Strategies to reduce risks:
- Governments and businesses can take steps to minimize the risks associated with potential policy changes. For example, diversifying markets and ensuring proper controls on re-exports of Chinese goods can help avoid tariffs.
- Precautionary measures, such as increased defense spending and purchases of American goods, could reduce concerns about trade imbalances.
- Diplomatic interactions with the Trump administration can influence decision-making, as happened during his first term.
Thus, the return of Donald Trump to the post of US president may have significant global consequences that are worth careful study and preparation.
