Stephen Roach

Opinion | Trump 2.0 is likely to be worse for China and the global economy

While Trump’s rhetoric and policy sometimes diverge, this time around there may be more reason to take him literally

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Stephen Roach

Published: 8:30pm, 11 Nov 2024Updated: 11:50pm, 11 Nov 2024

And so, the blame game begins. Predictably, it didn’t take long for the second guessers of the hindsight machine to throw grenades at Kamala Harris and the Democrats. The media is hyperventilating over what quickly has been dubbed another American seismic political shock. Note, however, that Donald Trump’s apparent 2.5 percentage point margin of popular vote victory is far from historic.

It is time to move on. Acceptance, as they say, is the first step on the road to healing. That’s true not only of the 48 per cent of American voters on the losing side of this election, but true for all citizens in a sharply polarised nation.

But letting go does not mean ignoring the consequences of what happened on November 5. For me, it’s important to think about what Trump 2.0 portends for the global economic outlook, in general, and for the US-China conflict, in particular.

Notwithstanding consensus forecasts for a global soft landing over the next several years, my sense is that the risks on the downside far outweigh those on the upside for three reasons: a sticky disinflation that would prove problematic for monetary policy and interest rates, mounting disparities in the mix of global output, and the political and social repercussions of a world in conflict.

That latter concern seems especially important in the aftermath of this election. Trump is a man of conflict – the ultimate political disrupter. His use of provocative messaging is unparalleled for a major figure in the annals of modern US politics. That’s true not only of the vicious personal attacks he directs at political opponents but also of the extreme positions he takes on domestic and foreign policy.

However, it is important that we don’t get misled and distracted by his rhetoric. That could well be the clever trap he set for the US body politic. By exhausting ourselves through indignation and fact-checking, we risk missing the basic point of his approach – using provocation to dominate the political and policy discourse.