[Big read] ‘America First’ returns: How Trump will reshape the world

Former US President Donald Trump and his “America First” policy are about to make a strong comeback to the White House, and this is putting the whole world on high alert. 

How will he handle the Ukraine war, what will he do to stop the Israel-Palestine conflict and how will he deal with Iran? All eyes are on Trump.

Experts are also worried that his policies will worsen fiscal conditions in the US, deepen the chasm that already exists in American society, and erode the country’s status as a leader in global affairs. 

When Trump takes over as president from Joe Biden on 20 January next year, the US economy will likely be on the uptick, but society will still be increasingly fractured. Globally, the Ukraine war would likely still be in a deadlock, though it’s anyone’s guess whether Israel’s military campaign in Gaza and Lebanon might further expand to involve more of the Middle East.

Trump made several promises on issues both at home and abroad during his run for office, but they were sparse on details. For an insight into his plan to tackle the various challenges, there is no better way to start than by looking at his cabinet appointments, the policies he set in place during his previous term as president and the statements some of his staff have made.

One thing remains a constant across his various policies: his promise of “America First”. What this means is that American interests will always take precedent over the interests of any other country. Against this backdrop, Trump is championing trade protectionism, economic nationalism, and boosting the global competitiveness of the US; he also plans to cut back on foreign aid and curtail participation in international accords and multilateral organisations. 

Ensuring the US stays out of the war in the Middle East and Ukraine is in line with Trump’s “America First” policy.

Although Trump has stated his support for Israel’s action against Iran and its agents, he has also told Israeli Prime Minister Benjamin Netanyahu that he wants Israel to end the war in Gaza by January next year. 

Trump has even suggested putting more pressure on Iran. Although he did not go into specifics, he put extreme pressure on Iran through the imposition of severe sanctions during his first term as president. These sanctions halted economic growth in Iran, thereby limiting Iran’s influence. Trump’s running partner and vice-president in-waiting JD Vance, on the other hand, has said that the US did not wish to start a war with Tehran.

It is currently unclear how Trump will find the balance between supporting Israel and ending the war. In response to Lianhe Zaobao’s enquiries, Dr Todd Belt, professor and director of the Political Management Masters’ Programme at George Washington University, said Trump will take a unilateral approach. He also said that Trump would discard all of the multilateral ceasefire negotiations the Biden administration undertook, choosing instead to work independently with Netanyahu.

Dr John Donaldson, an associate professor of political science at Singapore Management University’s School of Social Sciences, is also of the view that Trump will continue giving Netanyahu his full support. While the war in the Middle East could end soon, it would happen only after Gaza is annihilated or permanently under Israeli control. In such circumstances, a cessation of conflict cannot be considered peace as it comes at the expense of Gazan and Palestinian hopes.

The international community generally favours the two-state solution as a long-term resolution to the conflict between Palestine and Israel, but Trump chose to isolate Palestine during his previous term. He went as far as to offer some Arab countries — such as the United Arab Emirates and Bahrain — incentives to normalise relations with Israel and to stop insisting on Israel’s acceptance of a two-state solution. 

It is commonly believed that Trump will continue on the same path when he returns to the White House. On 12 November, Trump announced his appointment of Mike Huckabee, former Arkansas governor, as the US ambassador to Israel. Huckabee, a staunch supporter of Israel, once said there was “no such thing as a Palestinian”. 

Trump declared during his election campaign that he would end the Ukraine-Russia war within 24 hours of entering office. This would ensure the US no longer has to provide military aid to Ukraine, which would reduce the drain on national resources. 

No details were provided on how Trump plans to end the war, but Vice-President-elect JD Vance previously outlined a plan back in September: Russia would get to retain all the occupied territory, while Ukraine would agree not to join NATO.  After Trump’s victory, The Wall Street Journal reported on 6 November that the Trump team suggested Ukraine delay its NATO membership bid by at least 20 years in exchange for the supply of weapons from the US. 

Kevin Chen, an associate research fellow with the United States Programme at the Institute of Defence and Strategic Studies (IDSS) of the S. Rajaratnam School of International Studies (RSIS), Nanyang Technological University (NTU), told Lianhe Zaobao that regardless of whether the plan is real, Trump is likely to push Ukraine to enter into peace talks with Russia and possibly even to accept unfavourable terms to end the war. 

Trump’s “America First” policy will also extend to his attitude towards NATO — he has previously accused NATO’s European members of taking advantage of the collective security arrangement and getting a free ride from the US, without upholding their commitment of spending 2% of their annual GDP on defence. He has also threatened to withdraw from NATO outright because of this.

Chen is of the view that Trump is unlikely to carry out his threat, but he will likely seek to force European members of the treaty organisation to take on a bigger burden of providing security for their continent. 

Another proposal that has emerged entails the development of a two-tiered system, whereby member states that have not met the 2% target will not be able to enjoy the “defence largess and security guarantee of the US.” Chen said, “In practice, these efforts may well ensure NATO’s survival for the immediate future.”

“However, a Europe that can largely provide its own security guarantee while the US focuses on Asia is also a Europe that might be less willing to follow US leadership on security. This would have important implications for the US relationship with the continent at large.”

The majority of voters choosing to send Trump back to the White House did so in hopes that he would turn the economy around and improve livelihoods. Trump’s key election promises regarding economic rejuvenation comprised tariffs on all imports, cutting taxes, and mass deportation of illegal immigrants.

In Trump’s view, levying tariffs of 10 to 20% on all trade partners and imposing a tariff of 60% or more on imports from China would reduce US trade surplus and simultaneously bring manufacturing jobs back to the US. 

He also promised broad tax cuts, especially on corporate taxes, to encourage businesses to increase domestic investments and boost America’s competitiveness, create jobs for Americans and to bring profits back from abroad. To achieve this, he plans to make permanent the US$4.6 trillion tax cuts he enacted in 2017, which are due to expire in 2025. He also proposed new tax cuts, exempting tips and overtime pay from taxation, in order to increase household income.

Trump’s hard line stance against immigration has also been portrayed as a measure to boost American incomes. His claim is that illegal immigrants add pressure to American workers, wages and social programmes. 

The common view among analysts is that while Trump’s plans may give the American economy a short term boost, they will also lead to an even bigger budget deficit, weaker job growth, an increase in inflation and worsening inequality.

According to a model produced by the University of Pennsylvania’s Wharton School of Business, income tax will fall across all income brackets if congress agrees to extend Trump’s tax cuts. However, the biggest beneficiaries of the reduction will be high income households. On the whole, Trump’s tax cuts will result in a total loss of US$5.8 trillion in federal income over the next decade. 

If additional tariffs are the only means of making up for the loss of revenue from income tax, the right-leaning Tax Foundation estimates that the US government will see its deficit increase by a minimum of US$3 trillion in the next ten years. Wharton School’s deficit projection is US$7 trillion. 

The expansion of tariffs across the board will increase the average rate of tariffs in the US to 17.7%, the highest since 1934. Manufacturers are expected to pass the cost on to consumers, which will lead to an increase in consumer goods prices. The move is also likely to draw tit-for-tat tariffs on American exports from trade partners from around the world. 

Responding to Lianhe Zaobao’s queries, Thomas Fullerton, an economics professor at the University of Texas at El Paso, pointed out that while Trump is threatening to apply full scale tariffs on all imports, he might probably only impose tariffs on a few items. Fullerton predicts that Trump will then declare a “trade war victory”, rather than risk widespread retaliation from multiple countries. 

Dr Cai Daolu, a senior lecturer and the academic director of the Master of Science Strategic Analysis and Innovation programme at NUS Business School’s department of strategy and policy, also observed that Trump’s trade policies resulted in higher prices for US consumers during his previous term. He said Congress is unlikely to give Trump a free hand on the issue; the majority of Republicans themselves do not like tariffs, and are concerned about the implications of future retaliation by trade partners and the impact on domestic industries. 

Some observers also take the view that the part of Trump’s proposal most likely to trigger inflation was the plan to deport millions of migrant labour. This will once again tighten the labour market and stimulate wage increases, which will in turn push prices up. Such an increase in prices runs contrary to Trump’s campaign promise to lower the cost of living. 

According to UK think tank Oxford Economics, US economic growth will accelerate in 2026 and 2027 and slow down significantly towards the end of Trump’s second term, if the US Congress agrees to Trump’s fiscal measures. 

On the risks Trump’s economic policies may pose for the American economy, Robin Han, portfolio manager at Phillip Securities, told Lianhe Zaobao that Trump’s tax cuts will give a boost to the economy, but also speed up the rise in government debt simultaneously. 

He expects that the high level of debt will drive economic growth, while also putting higher pressure on inflation and interest rates during Trump’s term. Han also believes that although the level of debt will not trigger a debt crisis and market volatility during Trump’s term, the negative impact will be felt years later. 

Cai Daolu pointed out that if the US government cannot ensure fiscal sustainability, it would be left with two options: defaulting on debt, or loosening monetary policy to inflate it away. Inability to address fiscal imbalances may cause the country to return to the era of stagflation. 

Stagflation is when consumer prices continue to rise but economic growth does not. If stagflation occurs, Fullerton says that economic conditions in the US will worsen, causing a rise in both personal and business bankruptcies. 

From government efficiency to education and abortion rights, Trump looks set to reshape the US government.

On 12 November, Trump announced the appointment of billionaire Elon Musk and entrepreneur Vivek Ramaswamy to head the newly formed Department of Government Efficiency (DOGE), tasked with “slashing excess regulations, cutting wasteful expenditures, and restructuring Federal Agencies”.

On the education front, Trump has vowed to do away with the Education Department, limiting the role of the federal government in education and transferring more power to state and district governments. 

Trump is also seeking to give the right to decide on abortion laws to state governments, and has promised he will not sign off on federal abortion laws. On the environment, Trump said he wanted to save ageing coal-fired power plants and raise oil and natural gas production. 

Realising all of Trump’s campaign promises might worsen the divide in an already deeply divided America. In his victory speech on November 6, Trump had promised to heal the divide, calling on voters to unite and “put the divisions of the past four years behind us”.

But Trump has always been a polarising figure who is not known for keeping campaign promises or following through on what he says, and it remains to be seen if he will actually try to heal the divide. 

Responding to queries from Lianhe Zaobao, Cal Jillson, a professor of political science at the Southern Methodist University in Dallas, Texas, said it was hardly Trump’s style to resolve differences. “Donald Trump’s personality and political style is to disorient his opponents — and oftentimes his supporters — by being blustery and unpredictable,” he said. “The goal is to exhaust his opponents until they beg to comply with his wishes.”

Todd Belt shares the same view, saying, “Trump will continue to divide the country because that is what has worked for him. His deportations will be divisive, as will his efforts to go after those who he feels have wronged him.”

Regardless, Trump has won the absolute majority of the votes, receiving a strong mandate to lead Americans in the next four years. And with the Republican Party taking back control of the senate and retaining a majority in the House of Representatives, Trump will have greater freedom in policy-making. 

From his cabinet appointments, Trump is likely to deliver on his promise to introduce radical measures for disruptive changes. The US will be a very different place after four more years of Trump as president. Only time will tell if this will be good or bad for the US and the rest of the world.

This article was first published in Lianhe Zaobao as “特朗普攘外安内 美国优先强势回归”

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