Will Trump’s Return to the Presidency Change the Middle East Economy?

Will Trump’s Return to the Presidency Change the Middle East Economy?

Trump’s Economic Agenda Targets Trade, Tariffs, and Energy Sectors

By Al-Oula Monitor

The world is closely watching Donald Trump’s potential return for a second term as U.S. president, particularly regarding his economic policies and their implications for the global economy. Many wonder if Trump will replicate the strategies of his first term or adapt them to a changing landscape.

Forecasts indicate that Trump’s economic tools will largely mirror those of his first term, focusing on tariffs and tax cuts. However, the scale and scope of these measures are expected to be broader and more aggressive. For instance, he plans to implement sweeping tariffs on imports, including a 60% tariff on Chinese goods and rates between 10% and 20% on imports from other U.S. trading partners. Under extreme circumstances, tariffs could escalate to 100%, 200%, or even 1,000%.

A recent report in The Wall Street Journal highlights Trump’s intent to impose larger and more comprehensive tariffs, alongside more targeted tax cuts. These measures are expected to increase inflationary pressures and boost economic growth but could also expand the federal deficit and drive up interest rates. Economists predict that a 60% tariff on Chinese imports and 10%-20% tariffs on other imports would increase U.S. consumer prices by approximately 0.9%, adding inflationary pressure. Importers might absorb some of these increases, impacting their profit margins.

Additionally, a stronger U.S. dollar could raise the cost of imports. Trump may use tariffs as a bargaining chip in trade negotiations, potentially mitigating their immediate impact.

Trump also aims to extend provisions from the 2017 tax reforms, estimated to cost $5 trillion over ten years, according to the Federal Budget Committee. His proposals include further corporate tax cuts and deductions for mortgage interest and state taxes. These efforts aim to reduce U.S. dependence on Chinese manufacturing, promoting economic self-reliance—a costly but, in Trump’s view, worthwhile endeavor.

The broader economic impacts of Trump’s policies remain uncertain. For example, U.S. oil production and gasoline prices depend on global market factors such as OPEC policies, sanctions, Middle East conflicts, and Chinese economic growth.

Furthermore, Trump’s immigration policies, particularly deporting undocumented workers, could exert upward pressure on wages and prices. However, the vast size of the U.S. labor market may dilute this effect. Trump’s agenda goes beyond economic growth; it also seeks to restore high-quality jobs, revitalize manufacturing communities, and reduce reliance on China as a geopolitical rival.

Implications for Global Trade and Energy Markets

Experts predict that Trump’s policies will initially boost U.S. stock markets, particularly in energy and defense sectors. However, industries like technology and healthcare, which rely heavily on international trade and skilled labor, may face challenges.

Trump’s emphasis on protectionism and regulatory measures could redefine global trade dynamics. For example, European markets, already struggling with competition from Chinese goods, may experience additional strain under new U.S. policies.

Jordanian economist Dr. Khalid Al-Wazani predicts that Trump’s return would herald significant shifts in global economic relations, particularly trade. Trump’s protectionist measures would extend beyond U.S.-China relations to include many countries dissatisfied with unrestricted trade’s impact on local industries. Europe, for instance, faces intense competition from Chinese products, particularly in automotive and transportation sectors.

Al-Wazani notes that while Trump’s policies may bolster the U.S. economy through domestic product protection, tax cuts, and large-scale infrastructure projects, they could harm global economic collaboration. His policies might also spur the formation of economic blocs outside U.S. and dollar dominance, signaling a shift in global trade and finance.

Economic writer and analyst Awni Dawood argues that Trump’s economic vision, while beneficial domestically, carries significant global repercussions, particularly for Europe and China. Dawood points out that Trump’s focus on tariffs as a revenue tool and job creation strategy has convinced the American electorate of its merits, despite potential risks like inflation, rising national debt, and economic volatility.

Impact on Jordan and the Region

For Jordan, which shares a strategic partnership with the U.S. under both Republican and Democratic administrations, the effects of Trump’s policies are nuanced. U.S. aid to Jordan is secured through 2029, and the trade balance with the U.S. favors Jordan. However, like other nations, Jordan could face ripple effects from global economic disruptions and regional tensions, including ongoing conflicts in Gaza and Lebanon.

In summary, Trump’s economic agenda for a second term promises both opportunities and challenges. Domestically, his policies aim to strengthen the U.S. economy and reduce reliance on foreign production. Internationally, however, they may disrupt global trade, exacerbate inflationary pressures, and create new economic alliances outside U.S. influence. As the world watches, the stakes for the Middle East and the global economy remain high.