Donald Trump’s economic policies have sparked intense debates about their impact on global trade, financial stability, and the future of the U.S. dollar as a reserve currency.
The term Trumpconomics encompasses measures such as protectionism, tax cuts, and the restructuring of trade agreements. But what are the expected effects of this approach?
During a recent conference at the IESE Business School Madrid campus, Juan José Toribio, Emeritus Professor of Economics, presented a detailed analysis of these potential impacts:
📉 Global trade decline
One of the most visible effects of a protectionist policy is a reduction in global trade. Tariffs and renegotiated trade deals may limit the flow of goods and services, affecting both allied nations and emerging economies.
📉 Global GDP at risk
The decline in trade directly impacts global economic growth. Reduced foreign investment, higher import costs, and trade tensions could create uncertainty in markets, slowing down GDP growth worldwide.
📈 Rising inflation and financial volatility
Trump’s economic policies could lead to increased inflation and fluctuations in exchange rates. Factors such as the trade war with China, fiscal stimulus, and a growing public deficit could put pressure on prices and generate financial instability.
📉 The end of the U.S. Dollar as the reserve currency?
One of the biggest questions is the future of the U.S. dollar in the global economy. If U.S. policies undermine trust, some countries may look for alternatives, such as:
✔️ New international currencies for trade transactions.
✔️ Cryptocurrencies, offering independence from the traditional financial system.
✔️ Gold reserves, as a hedge against economic risks.
A déjà vu economic crisis?
Professor Toribio referenced Latin America’s Lost Decade of the 1980s, as described by CEPAL, suggesting that an extreme protectionist approach could lead to a similar crisis. Back then, economic restrictions and foreign debt led to stagnation and a loss of competitiveness in many developing economies.
Where are we headed?
The economic decisions of a global power like the U.S. don’t just affect its own economy—they have worldwide consequences.
Whether Trumpconomics strengthens or weakens the economy will depend on how markets adapt, the resilience of financial institutions, and the response of other global players.
One thing is certain: the economic landscape is changing, and the future will depend on how countries and businesses adjust to this new order.
By Ángel González
Ideagoras
