Donald Trump has been re-elected US president after defeating his Democratic rival Kamala Harris in one of the most fraught campaigns in history, paving the way for a fundamental shift in US economic relationships with the rest of the world.

Donald Trump became the 47th US president after a strongman campaign promising to address rising inflation and illegal immigration into the world’s largest economy. He is the first former president to be re-elected to a non-consecutive term since Grover Cleveland, who served two White House terms in the late 19th century.

In a victory speech at his Mar-a-Lago resort in Florida, President-Elect Trump said there would be a “golden age” for the US under his new administration: “America has given us an unprecedented and powerful mandate.”

Now Trump’s return to the Oval Office is secure, here are four charts to make sense of his potential impact on global trade, investment and economic growth. 

How will Trump’s second term affect the US trade balance?

Trump’s victory comes at a turning point for US trade. In September 2024, the US trade monthly deficit rose to $84.4bn, an increase of 19.2% from a month earlier, according to Bureau of Economic Analysis figures released yesterday. This marked the greatest monthly deficit in current prices reached since April 2022 and continues a long-term US trend. 

On the campaign trail, Trump had promised to impose universal tariffs of between 10% and 20% on imports from all countries. He also threatened to impose a 60% tariff on all goods coming from the US’s main geopolitical rival, China. The National Retail Foundation has said the impact of Trump’s proposal “would be dramatic”, estimating it could reduce US consumers’ spending power by between $46bn and $78bn each year.

How will they affect other countries? 

The protectionist measures could have vast macroeconomic impacts abroad, too. Research by the National Institute of Economic Social Research, a UK think tank, found that the policy could lead US real gross domestic product to be up to 4% lower in five years’ time. 

After five years of Trump’s proposed tariffs, Mexico’s GDP is forecast to be about 5% lower than it would have been without the tariffs, according to NIESR. Small open economies like Switzerland and Singapore, as well as Eastern European countries heavily reliant on exports of manufactured goods, are also expected to feel heavily affected. 

Will Trump’s second term shift global investment flows? 

FDI into the US shifted fundamentally under Democratic President Joe Biden’s industrial policies, including the Inflation Reduction Act and the Chips and Science Act, leading companies to pledge billions of dollars-worth of investment.  

Between January 2021 and August 2024, the US saw $583bn-worth of greenfield FDI announcements, according to fDi Markets estimates. This was 76.7% higher than the almost $330bn-worth of FDI pledged during the whole of Donald Trump’s presidency, from January 2017 to December 2020. 

These investment pledges in Biden’s term brought with them promises of more jobs than under Trump’s first term in swing states like Georgia, Arizona, North Carolina and Nevada. But the employment dividend was only marginal in Pennsylvania, which Trump won back from the Democrats in the 2024 election, and was in fact lower in other swing states like Michigan and Wisconsin.

Fewer subsidies, more tax cuts?  

A key element of Trump’s first term was the 2017 Tax Cuts and Jobs Act (TCJA). This landmark legislation cut the headline US corporate tax rate from 35% to 21% and fundamentally changed the way US companies invest abroad and foreign multinationals invest in the US.  

A 2018 analysis by the Centre for European Economic Research found that the TCJA reduced the effective tax burden on US outbound FDI to the EU27 countries and the UK by 5.5%. Meanwhile, the effective tax burden on US inbound FDI from the EU28 was reduced by 12.2%.

This impact is shown by inbound FDI to the US by component. Figures from the BEA show that companies investing into the US reduced their use of debt instruments during Trump’s first term. The TCJA also “eliminated the tax incentive to keep earnings abroad and led to US companies repatriating a large part of their accumulated earnings abroad”, found a Federal Reserve 2020 analysis. 

This data gives us a glimpse into the potential impact of another Trump presidency on global trade and investment. Trump’s promise to slash the US corporate tax rate further from 21% to 15% – a reversal of Kamala Harris’ plan to raise it to 28% – is likely to have far-reaching consequences and impact decision-making in multinationals' boardrooms.

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