Donald Trump’s return to the White House, along with a Republican-controlled Congress, might result in significant alterations in global growth. This time, Trump has less political restraints. During his previous tenure, Obama curtailed US aid to groups that provide abortion services (the “global gag rule”), decreased financing for UN agencies, withdrew from the Paris Climate Accord, and lowered US payments to the World Bank and the World Health Organisation. His hold on the Republican Party has grown since then, lessening the probability of congressional opposition, which previously hampered Trump’s attempts to cut foreign assistance expenditures.
ECONOMIC IMPLICATIONS ON THE US
Donald Trump’s victory in 2016 disrupted a political consensus that had existed since the Great Depression: a liberal, US-led, rules-based international trade framework was in the best interests of the United States. President Trump, for the most part, followed through on his nationalist and protectionist trade and immigration policy campaign promises, withdrawing from the Trans-Pacific Partnership negotiations during his first week in office, launching trade wars, particularly with China, renegotiating existing free trade agreements to make them more restrictive, increasing deportations, and attempting to ban immigrants from predominantly Muslim countries. In sum, Trump delivered on many (but not all) of his campaign pledges.
Trump has returned as the Republican presidential contender for 2024, proposing the expulsion of millions of immigrants from the United States, more trade restrictions, and the loss of the Federal Reserve’s political independence. The tone of these initiatives, as well as Trump’s track record of honouring promises, call for an examination of their prospective consequences. Ironically, despite his “make foreigners pay” rhetoric, this bundle of policies harms the US economy more than any other in the world. They lead to lower US national income, lower employment, and more inflation than would otherwise occur. In some circumstances, other nations profit from money inflows leaving the United States.
Immigration restrictions, both legal and unauthorised, have played a significant part in Trump’s campaigns from 2016 to this year: He once again intends to “build the wall” along the US-Mexico border, limit both legal and illegal immigration, and subject visa applicants to “extreme vetting.” Trump also proposes far-reaching immigration restrictions, including removing birthright citizenship for undocumented immigrants’ children in the United States, conducting widespread ICE workplace raids, and revoking humanitarian parole. Trump has frequently promised to carry out the “largest domestic deportation operation in American history,” targeting what he claims are the 15 million to 20 million undocumented immigrants in the United States, around 8.3 million of whom are considered to be employed. The Republican Party platform also supports the aim. Trump intends to model this mass deportation after “Operation Wetback,” a 1956 effort under the Eisenhower administration that deported 1.3 million individuals. The operation utilised “military-style tactics” to collect and deport Mexican immigrants from the US.
This time, however, there is considerable emphasis on the logistics of large-scale operations. Regarding the low-end objective of 1.3 million deportations, it is difficult to conceive that the US government now could not reach at least what was accomplished during the Eisenhower administration seven decades ago. The objective of eliminating all illegal workers from the employment sector is undoubtedly ambitious, if not unattainable. It is feasible that if the deportation operations were sufficiently severe and advertised, they might induce voluntary departures. While the latter distinction may have political or diplomatic implications, it is irrelevant from a modelling perspective. Similarly, other nations, such as Venezuela, may refuse to receive deportees, leaving them in limbo.
Trade is the second domain of Trump’s foreign economic strategy. The self-proclaimed “tariff man” is campaigning on what he calls an “America first trade platform that takes a sledgehammer to globalism,” promising to reduce dependency on China, generate millions of jobs, and boost GDP through increased tariffs and import controls. Trump’s proposed trade policies include imposing a universal baseline tariff of either 10 percentage points or 10 additional percentage points on all imports into the United States, potentially including imports from free trade agreement partners; levying a 60 percentage point (or more) tariff on all imports from China; and revoking China’s permanent normal trade relations (PNTR) status, formerly known as most favoured nation.
In the case of the universal baseline tariff and the additional China tariff, Trump would most likely use the International Emergency Economic Powers Act (IEEPA) of 1977, Section 338 of the Tariff Act of 1930, or even the Trading With the Enemy Act (TWEA) of 1917 as legal justification for his actions. Such initiatives are likely to be challenged in court. Still, courts have typically deferred to the administration in such matters, though not all experts believe the Supreme Court would concur in these particular cases. The free trade agreements were formed by Congressional legislation; therefore, imposing tariffs on these countries via presidential action would face a stiffer legal challenge. Alternatively, with a sufficiently supportive Congress, these new tariffs could be established via legislation.
Finally, it has been claimed that former Trump administration officials and friends are working on plans to reduce the Fed’s political independence by giving the president more control over monetary policy. While central bank independence is not inherently an international economic policy, it has the potential to have major cross-border macroeconomic spillovers. Among the ideas floating around are replacing Fed Chair Jerome Powell with someone more politically pliable, subjecting Fed regulations to White House review, requiring the president to be formally or informally consulted on interest rate decisions, and, perhaps most fancifully, making the president an exofficio member of the Fed’s board of governors. The risk is that the president will encourage the Fed to lower interest rates than necessary to stimulate better economic development despite the possibility of higher inflation.
ECONOMIC IMPLICATIONS ON SOUTH EAST ASIA
Washington’s South Asia policy will be consistent with its Indo-Pacific vision, which was formed during Trump’s original presidential bid. His foreign policy might have a big impact on the region’s security and economy, with India playing an important role given its contributions to the Indo-Pacific. A second Trump administration might change the existing dynamics of South Asian geopolitics and economy. Trump opposes rerouting US-China commerce through other nations, and Oxford Economics predicts that his tariffs would reduce US imports by 3% and exports by 8%, affecting “non-China Asia.” The continued US-China trade tensions may cause a restructuring of global supply chains, potentially transferring 20% of manufacturing away from China by 2025. During the previous administration, nations such as Malaysia, Vietnam, and Thailand gained from the trade war since manufacturing shifted there to create new supply chains. However, competition for low-cost manufacturing remains tough, with Vietnam obtaining far more foreign direct investment (FDI)—$36.6 billion in 2023—than Bangladesh. India has a strong infrastructure to attract export-oriented firms, but regional trade alliances encounter hurdles.
ECONOMIC IMPLICATIONS ON BANGLADESH
The Trump administration’s “America First” policy could result in tariffs that harm export-dependent countries like Bangladesh and India. A 5% tariff hike on Bangladeshi exports worth $9.74 billion (2022) could result in a $487 million annual loss. Tighter immigration restrictions may also restrict remittances, which are a significant source of income in South Asia. Bangladesh received $2.6 billion in remittances from the United States in 2023, representing 15% of total inflows.
Trump plans to implement harsh immigration policies, including the repeal of the Public Charge Policy and the Deferred Action for Childhood Arrivals (DACA) program, which could result in over half a million DACA beneficiaries losing their protected status and making it more difficult for immigrant families to access essential services like healthcare; tighter immigration laws could harm several South Asian countries by reducing the flow of skilled workers and remittances; and educational exchanges could be negatively impacted if more than 200,000 South Asian students currently studying in the United States opt for more hospitable countries like Europe, Canada, or Australia. Lastly, India’s increasing influence in the QUAD strengthens its strategic position, but it could marginalise smaller economies that disregard regional cooperation through organisations like SAARC or ASEAN.
Bangladesh will confront a number of challenges and opportunities during Trump’s second term. The ready-made garment (RMG) business, which accounted for 84.7% of total goods exports in FY23 (ERD, 2024), adds minimal value relative to the overall product value. To advance up the global value chain, Bangladesh must concentrate on producing more complex items and increasing backwards and forward links. Despite product diversity, design, branding, sales, and after-sales services are mostly overlooked. Improving backward connections is crucial to increasing domestic value addition. Furthermore, diversifying the export base is critical for reducing the risks associated with tariff rises. Promising businesses such as ICT, pharmaceuticals, and agro-processing, which had significant growth in 2023, provide viable options for alleviating economic challenges.
Other essential needs include infrastructure development, with Bangladesh ranked 88th out of 139 countries in terms of logistics performance (2023), significantly lower than Vietnam’s 43rd and India’s 38th rankings. In light of the current realignment of global supply chains, it is critical to address how Bangladesh will attract FDI to its industrial zones, as well as regulatory rationalisation. Migration and remittances remain important, with the United States receiving $2.6 billion in 2023; forming partnerships with countries with more open immigration policies, such as Canada, the United Kingdom, and Australia, might help.
Given that more than 9,000 Bangladeshi students study in the United States each year, it is also imperative that significant efforts be made in the education sector to fortify regional institutions and establish global academic partnerships as a buffer against the possibility of stricter visa regulations by the US. Lastly, in order to protect its strategic and economic interests, Bangladesh will need to forge relationships with countries like Vietnam and Indonesia and broaden regional cooperation through SAARC and ASEAN as India solidifies its position in QUAD.
To overcome the challenges posed by Trump’s policy aims, South Asia and Bangladesh must take aggressive measures. The region must lead efforts to foster collaboration in response to changing global dynamics, while Bangladesh should focus on diversifying its exports, attracting international investment, and developing infrastructure. Innovative solutions are required to support a fair migration agenda that secures equal gains from labour mobility for origin and destination countries, businesses, and all workers—nationals and migrants alike. In an ever-changing world, developing links with new destination countries and extending domestic educational possibilities are key steps towards reducing risks and capitalising on emerging opportunities for long-term growth.
Author- Amar Chowdhury
