The Democrats campaigners are claiming Donald Trump have grown scared and regretted his choice for VP.
They claim Joe Biden's endorsed replacement, Kamala Harris is neck-on-neck on the polls. The Presidential race is made to be a confrontation between a Prosecutor against a convicted felon.
Assuming it is only a political hype, the hypothetical bet before campaign get into full gear favours Trump to be the next US President. Thus the question of interest would be: What the world would be like with his return?
This time around, the China, which Trump picked a fight in his first term of office, pose a serious threat, at least economically, to the American hegemony and unipolar status. What is to happen under Trump who intend to make America great again (#MAGA)?
How will he do that?
The Star Online's outlined the senarios of Trump's possible second Presidency below:
Five scenarios that may happen from Trump 2.0
By BARNABAS GAN
INSIGHT
Wednesday, 24 Jul 2024
WITH the US presidential election looming just four months away, global markets are on edge, anticipating potential outcomes.
We have penned five scenarios that might unfold if Trump is re-elected as the 47th US president, covering geopolitics, de-dollarisation, rates, and implications for global and Asean economies.
It is essential to note that these are potential scenarios; the actual outcomes could differ, offering opportunities for change and adaptation.
Scenario 1: China tensions and negative spillover to Asean
Central to Trump’s approach is a robust stance on US-China relations, marked by escalating tariffs that have significant implications for global investors. Historical data indicates that tariffs implemented during Trump’s tenure shaved off 0.1% of global growth in 2018, escalating to 1.4% by 2020.
His latest proposal includes a sweeping 10% import tariff, coupled with intensified rates targeting China specifically. This move is expected to drive US headline inflation to 4% by 2025, up from the current 3%.
Such measures could disrupt global trade flows and industrial progress over the long term.
However, a Democrat victory might temper tensions, offering hope for the future of US-China relations.
Trump’s proposed tariff hikes on Chinese imports, particularly in sectors like new-energy vehicles and semiconductors, underscore a persistent strain in US-China relations. This geopolitical friction is poised to sway investor sentiment, favouring developed market equities at the expense of emerging markets.
Scenario 2: Rate cuts in deference to political pressures
If Trump wins, the US’ real rates could sharply decline as he influences the Federal Reserve for substantial rate cuts, possibly to zero or negative levels as seen in 2019. He cites competitive disadvantages and favourable inflation conditions.
The prognosis of US inflation is unclear, given the conflicting factors. At this point, the path of least resistance is for US inflation to head lower into the new year, albeit the Trump-induced tariffs may eventually lead prices higher in the medium term.
Market expectations are strong for Federal Funds Rate cuts in 2024 and 2025, with implications including a rally in US-centric equities, potentially 15% to 20% gains in 2025, and a bull-steepening bias in the US Treasury’s two to 10-year spread.
Global central banks, particularly the European Central Bank, will likely align with Federal Open Market Committee (FOMC) cuts, while Asean-centric rates face downward pressure.
The US Dollar Index is anticipated to soften below 100 by the first half of 2025, influenced by reduced carry advantages and yield-chasing behaviour favouring higher-yield assets.
Scenario 3: Stronger global drive to de-dollarise
In the context of a potential Trump presidency, his proposed tariffs to curb global economic growth could significantly hasten the global trend towards de-dollarisation.
This shift might expedite the emergence of a new trade currency by 2025, with BRICS nations (Brazil, Russia, India and China) actively exploring the creation of a reserve currency backed by their own currencies.
This potential shift towards a new trade currency could open up new opportunities for growth and development, particularly in Asia and Asean.
We are seeing a notable uptick in the use of the Chinese yuan for trade transactions and payments, potentially supported by increased adoption of local currency transaction agreements to reduce reliance on the US dollar.
Asean’s efforts in this regard, particularly under Malaysia’s forthcoming chairmanship in 2025, will be pivotal in shaping future financial dynamics and challenging the US dollar’s historical dominance in global finance.
Scenario 4: Increased geopolitically-driven sentiments
Increased geopolitical noise appears to be driven more by geopolitical factors rather than purely economic ones, focusing on two critical issues:
> The US potentially demanding payment from Taiwan for military protection.
> The risk of halting military aid to Ukraine.
Both could heighten global uncertainties and dampen investor risk appetite in a Trump presidency.
There are already some indications of early proxy for weaker risk appetite; Trump’s rhetoric to seek Taiwan’s payment for military protection has already sent the Taiwan Weighted Stock Exchange index down by 1.4% on intra-day trading on July 17, 2024.
Beyond the US-China, China-Taiwan and Ukraine-Russia tensions, there are other potential hotspots for geopolitical tensions in 2025, specifically North Korea-South Korea and the Middle East.
Scenario 5: Division of world order
Trump’s foreign policy rhetoric is stirring concerns about strained US alliances and potential economic isolationism, prompting trading partners to seek alternatives to traditional US economic ties.
Establishing trade and economic zones like the Regional Comprehensive Economic Part-nership, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, the European Union, and North Atlantic Treaty Organisation (Nato) reflects global efforts toward bifurcation into distinct orders amid geopolitical tensions and the pursuit of economic resilience.
Trump’s emphasis on economic isolationism and scepticism towards alliances such as Nato risks widening political divisions with US allies and could drive the formation of separate trade blocs globally.
Overall, Trump’s key trade ideas for a win are to:
> Long developed market-equities, especially US-centric
> Short on US dollar index
> Buy US Treasury on dips.
Expect higher market volatility over the next four months, with the US FOMC likely to refrain from cutting rates in the third quarter of this year on the back of tariff-induced inflation risk.
Conclusion: As anticipation builds for November’s US presidential election, the possibility of a Trump win looms large, with global concerns on the horizon.
However, these concerns may be exaggerated, given potential biases from ongoing legal battles affecting voter sentiment. For now, trading strategies remain discernible despite uncertainty, drawing on historical insights.
Barnabas Gan is the acting group chief economist at RHB Research Sdn Bhd. The views expressed here are the writer’s own.
While Trump was thumping over #MAGA at the recent Republican National Congress, an American Tik Toker, mdiethert highlighted Xi Jin Peng's speech at the Third Plenum of the 20th Central Committee of the CPC meeting on July 18th
It gives an indication Xi's plan to make his country great. We share mdiethert's highlight, below:
🔹 Modernizing China's economy: Xi wants to move away from a purely export-driven economy and focus on domestic consumption and innovation.
🔹 Focusing on education, talent, science & tech: He believes that investing in education and talent will drive China's future growth and development.
🔹 Prioritizing high-quality development over just GDP growth: Xi wants to shift the focus from just chasing GDP growth numbers to achieving sustainable, high-quality development that benefits all citizens.
🔹 Balanced growth for urban and rural areas: He recognizes the importance of bridging the gap between urban and rural areas, and wants to ensure that development is balanced and inclusive.
🔹 Cultural and ethical advancement: Xi believes that China needs to focus on cultural and ethical development, not just economic growth.
🔹 Harmony between humanity and nature: He wants to prioritize environmental protection and ensure that development is sustainable and in harmony with nature.
🔹 Modernizing national defense: Xi believes that a strong national defense is crucial for China's sovereignty and security.
🔹 Opening up while maintaining socialist market economy: He wants to continue to open up China's economy to the world, while still maintaining its socialist market economy.
The full text of the official communique could be found in Chinadaily.com here.
Xi's tone is more positive and in fact, the Tik Toker found Xi's outline of his vision for China as solid and impressive.
Compared to Trump's more confrontational and possibly disturbing and destabilising outcome, Xi offers a more harmonous option and greater dynamism.
What has happened to the liberal democrasy ideology preached by the Americans? What has their ideals taken humanity to? Can America be great again?
Thus, is the democratically acclaimed ideology presently the terrorist, which the communist were depicted by the American in the past?
Well, history has proven it did brought about peace, prosperity and equality to the world.
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