Introduction
Trump’s Foreign Policies and Trumponomics represent a major shift in the direction of U.S. leadership during Donald Trump’s presidency. His administration prioritized an “America First” approach, challenging long-standing global alliances and promoting economic strategies aimed at strengthening domestic industry. Through aggressive trade policies, tax reforms, and a more isolationist stance in foreign affairs, Trump redefined how the U.S. engaged with the world. This overview examines how Trump’s Foreign Policies and Trumponomics reshaped both international relations and the American economy.
In this blog post, we’ll explore the key provisions of Trump’s Foreign Policies and Trumponomics.
Context
- President Donald Trump’s tariff actions are currently focused on China as the United States works on trade deals with other countries, including India.
- While the Chinese, the world’s second-largest economy, have remained defiant, these US actions have impacted countries around the world in ways that have gone beyond just the economy and trade, and triggered disruptions and uncertainty.
- India has been put in an uncomfortable diplomatic position, with the US, its strategic partner, having imposed costs on it, and moved transactionalism to the heart of the bilateral relationship.
Content
- Trump’s World View
- Trump 1.0 vs Trump 2.0
- Role of Rapprochement 2.0
- Trumponomics
- Key Propositions
- Catalyst for Domestic manufacturing
- Way out for India
Trump’s World View
- Trump has a very Chaotic view of the world
- Trump’s America First approach is characterized by an open hostility toward traditional allies and institutions, in a much more pronounced way than during his first term.
- His approach is not merely transactional – it is deliberately antagonistic, a bullying style of diplomacy that leverages the United States’ economic and military might while scorning the norms that once underpinned the postwar international order.
Trump 1.0
- Trump identified China as the biggest problem and concern for the US in his first term (2017-21).
- In its National Security Strategy, the Trump 1.0 administration named China as a strategic threat and a rival.
- Then too, Trump went after Beijing with tariffs, but the President was held back by his advisers, who counselled against engaging in a full-scale trade war.
Trump 2.0
- Trump 2.0 is much more confident, unencumbered by inhibitions, and his advisors no longer have the influence that those in his first term were allowed to wield.
- Harold James professor of history and international affairs at Princeton University, told last week that Trump is now making decisions in the same way as Russia’s President Vladimir Putin did in February 2022 about invading Ukraine — when no adviser had the courage to tell him that Ukraine would not fall in days or weeks.
- Trump is going by his instincts, and is aggressively signaling global businesses to avoid China as a manufacturing base. This is a more direct attack on Beijing than has been done by any previous American President.
Role of Rapprochement 2.0
Change in the world view of USA –
- USA does not see Russia as a threat anymore.
- The U.S., in that sense, is breaking with the post-Second World War trans Atlantic consensus which see USSR as the most formidable enemy.
- In this Realist worldview, China is the systemic threat to the U.S’s primacy and a Sino-Russian alliance could make that threat perilous.
- It would entail a reorientation of America’s policy towards Russia — in a reverse order of what Henry Kissinger did in the 1970s.
Trump 2.0
- Punish all to punish china.
- The reason for imposing tariffs on all countries was to make sure that China is not able to reroute its products to the US through other Asian countries. The tariffs have impacted Indians — even though the lower rate applicable to India has given New Delhi an advantage over other Asian economies.
Trumponomics
- Key Propositions of Trumponomics
- America Needs to bring back manufacturing
- Free trade is not necessarily fair trade.
- America’s chronic deficits are unaffordable.
America Needs to bring back manufacturing
- Globalisation and the offshoring of manufacturing in the U.S. have meant the loss of millions of jobs.
- Thriving industrial centres have been reduced to ghost towns and whole communities hollowed out. There are other social costs: homelessness, rising crime, drug abuse, and broken families.
- For the vast majority of American adults, manufacturing remains the sole route to a high-wage job.
- Trumponomics argues that America also needs manufacturing for the purpose of national security.
Free trade is not necessarily fair trade
- Imports from China are cheaper because China provides subsidies to its firms in various forms, uses slave labour to drive down costs, invests funds in state-owned technology companies, and indulges in industrial espionage and theft of intellectual property.
- It makes no sense to have American companies wiped out by competitors that do not adhere to the rules of a free market economy.
America’s chronic deficits are unaffordable
- In recent years, trade deficits have been of the order of $500 billion to $1 trillion a year.
- Trade deficits are said to be self-correcting. When a country runs a trade deficit, the exchange rate of its currency is expected to depreciate. Exports will then rise and imports will fall, leading to a reduction in the trade deficit.
- Mr. Miran argues that the principle does not apply to the U.S. economy because the dollar happens to be the world’s reserve currency.
- An overvalued dollar means more imports, less exports and hence a persistent trade deficit.
Catalyst for Domestic manufacturing
- Tariffs are but one of four elements in Trumponomics. There are three other elements: tax cuts, deregulation and more drilling of oil.
- Tax cuts, made possible by tariff revenues, will compensate companies for the higher costs of imports.
- Deregulation will drastically reduce compliance and operational costs.
- More drilling of oil will help lower oil prices and counter the inflationary effects of tariffs.
- Taken together, the four elements constitute a plausible alternative to the current economic model.
Impact on India US Ties
- Erosion of Goodwill
- The impact of Trump’s actions has been an erosion of goodwill and a real risk of lowering of trust for the US.
- Trump’s tariffs, and the deportation of Indians carried out in full public view, has undermined some of that goodwill.
- The President’s actions have weakened “peace constituencies” in India.
- Undermining of US Soft power
- For many years, the US has been the premier destination for Indians seeking education and jobs.
- The 4-million-strong Indian diaspora and the 350,000 Indian students on US university campuses are testament to the Indian aspiration for the American dream.
- Successive US administrations gave Indians a wide democratic space in that country.
- This space is in danger due to Trump.
- The longer-term impact will be an undermining of US soft power.
Way Forward
- New Delhi would want the new US establishment to assess the lasting damage that its punitive measures cause to friends and partners.
- It would want the Trump administration to continue with America’s cooperative behaviour with its partners in the Quad — India, Japan, Australia — and in Europe.
- Trumps vision of MAGA should not come at the cost of credible allies.
Conclusion
Trump’s foreign policies and economic strategies brought major changes to traditional U.S. approaches. His “America First” agenda emphasized national interests, reshaped global alliances, and promoted domestic economic growth through tax cuts and protectionist trade policies. While controversial, these actions left a lasting impact on both U.S. foreign relations and economic policy.
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