Last month, Donald Trump won nearly 77 million votes to secure his second term as president of the United States. The Republican party will control the House and Senate, and three of his appointees sit on the Supreme Court. In
December 13, 2024
What does President Trump’s second term mean for developing countries?
Last month, Donald Trump won nearly 77 million votes to secure his second term as president of the United States. The Republican party will control the House and Senate, and three of his appointees sit on the Supreme Court.
In many ways, the world is going to experience the full extent of President Trump’s vision for the first time, free of prior constraints. While his critics raise concerns about his zero-tolerance immigration policy, and a potential rise in federal deficits, President Trump’s supporters tout his plans to reduce government waste, strengthen energy independence, and create new jobs.
Ultimately, President Trump’s “America first” vision is going to have major implications for the developing world. I believe his policies are going to create significant opportunities, especially for the nations poised to take advantage of new openings in existing supply chains.
Leaders in developing countries will need to navigate these implications as we continue pursuing economic growth, human development, and the betterment of humankind.
What does “America first” mean for the world?
Since his first term, Donald Trump has espoused an “America first” perspective. This position aims to bring jobs back to the US, especially in manufacturing industries.
In reality, Trump’s vision is part of a broader trend, sometimes called deglobalization. Though international trade remains intense, and will continue to grow, developed countries are trying to restructure supply relationships with middle-income and developing countries.
Since President Trump’s first term, international trade patterns have shifted as segments of different supply chains relocate to overcome emerging barriers. For example, China is now only the US’s fourth largest trading partner, with total trade valued at $575 billion in 2023, while Mexico ranks first, with total trade valued at $789 billion in the same year. (It’s crucial to remember that Joe Biden largely kept Trump’s tariff structure in place, even adding new tariffs on Chinese goods in May of this year).
So, what does Trump’s second term mean for developing countries — and how can we leverage these changes to create opportunity and accelerate growth?
Trump meets with world leaders.
New opportunities amid accelerating protectionism
All in all, President Trump’s “America first” vision means greater protectionism — which mostly comes down to higher tariffs on US imports.
In 2016, Trump’s administration began to renegotiate the US’s position in the global order, pulling the US from the Trans-Pacific Partnership in 2017. While Joe Biden joined the new Indo-Pacific Economic Framework in 2022, Trump has already vowed to withdraw. He also signaled a potential withdrawal from the World Trade Organization.
Interestingly enough, while Biden reversed a US exit from the WTO during his term, his administration has left its court of adjudication empty. This rendered the WTO incapable of enforcing its rules. I take this as another sign of the bipartisan support for renegotiating the US’s position, in spite of partisan criticisms.
So what does all of this mean?
For the next four years — and probably for several more after that — we will see increased barriers for global firms doing business with US industries and consumers.
New barriers might slow the development and integration of supply chains around the Pacific (representing some 40 percent of global trade). And, Trump’s threats to put tariffs on the BRICS nations are on another level. As Brazil, Russia, India, China, South Africa, and some other nations have discussed dropping the US dollar for international trade, Trump has promised 100 percent tariffs on any goods these nations export to the US.
There’s a lot of concern and fear about what the future holds, but we should pay more attention to emerging opportunities.
For my part, I see tariffs as an instrument to balance trade, if used in measured and strategic ways. As US trade with the world has helped to enrich all parties, the US middle class has borne the brunt of globalization’s impacts on employment. Every US leader, democrat or republican, has to protect domestic labor opportunities. Really, this goes for every nation in the world — developed or developing.
Typically, I oppose most government policies that might reduce trade or increase them in unhealthy ways. Tariffs are risky tools because they always come with two dimensions: the tariffs you impose and any retaliatory tariffs from trading partners. That’s why they should be a mechanism of last resort.
I view President Trump’s tariff policies as a gamble. It may be risky, but he’s ultimately betting on American firms.
For example, new tariffs on goods entering the United States might increase consumer prices in the short term, but that creates the opportunity for price competition. President Trump is betting that American companies will find new partnerships which are more advantageous to the US workforce.
After all, consumer demand in North America remains strong. While inflation remains a serious concern, Americans are still shopping this holiday season. Developing countries with emerging manufacturing sectors will have a greater opportunity to attract investment and step up production as price competition intensifies.
In fact, Indian commentators are already speculating about the new opportunities increased US tariffs on China may create. We already know that Apple is actively diversifying its manufacturing, shifting a significant portion of iPhone production from China to India.
While it’s not great for some Chinese manufacturers,firms in developing countries are poised to take advantage of a new competitive price advantage and grow exports to the US.
Manufacturers in Mexico, India, and other countries were the ultimate winners of the US-China trade disputes under Trump and Biden. Over the next few years, I expect more winners to emerge among developing and even some least-developed countries.
Now is the time for foreign direct investment in developing-world firms that can manufacture the goods which will be impacted by new US tariffs.
Donald Trump boards Air Force One.
Accelerating instability in the global supporting environment
If only we only had to concern ourselves with trade.
National policies are ultimately the turning factors that can move economies forward. However, a supporting environment is key to turning demand into opportunity (something I’ve discussed at length in my books).
Armed conflicts could be the decisive variables that impact Trump’s policy vision. Developing countries that want to take advantage of new opportunities could find themselves constrained by variables they can’t control.
For example, Putin’s invasion of Ukraine, and simmering tensions with NATO, could spell further disaster for the region. In the Middle East, escalations in Iran, Israel, Lebanon, and/or Syria could inflame the region — which is possible regardless of US intervention.
All of this could spell increased demand for humanitarian aid, even as Trump has promised further cuts to US aid spending, including a withdrawal from the World Health Organization. While this might mean more suffering in the short-term, my hope is that aid efforts are redirected toward the kind of trade that can actually create wealth, rather than just maintaining misery.
In terms of climate action, President Trump might withdraw the US from both the Paris Agreement and the UN Framework Convention on Climate Change. That said, leaders in California, Texas, and elsewhere have signaled that renewable energies are key areas for job creation. As AI and crypto drive more and more energy demand, investment in clean energy is only going to grow.
Furthermore, adjacent industries, from semiconductors and high-tech products to pharmaceuticals, are being impacted by the current China shock. These developments point to new opportunities for partnerships between the US and developing countries.
Finally, while Trump’s mass deportation plan is often understood in domestic terms, I think we should consider the international implications. For nations like Haiti, Guatemala, and others, the systematic deportation of migrants back to these countries will strain already limited capacities — and I hope to explore this issue more in a future post.
Regardless of US immigration policy, the flow of migration north throughout Latin America seems likely to continue as more and more people are displaced by conflict or environmental destruction. As the US stems the flow of migrants entering its southern border, migrants will continue to collect in Central American countries.
Migration to this region has had largely negative consequences, but it also presents an opportunity: A growing regional labor force. Latin and Central American governments that assimilate regional migrants into their labor forces could grow their tax bases, helping to pay for social services.
What now?
I hope this article gives you a clear and fair picture of how the next four years of US foreign policy might impact the developing world.
While US policy could exacerbate global crises, it also has the potential to bring peace and prosperity to the globe.
In the past, the US has been an exceptional partner to some nations and a significant barrier for others. I remain optimistic that Trump’s second term can create new opportunities for trade, partnership, and growth.
However, let’s make one thing clear before we go: The leaders of the developing world are ultimately responsible for ending poverty and creating opportunity in the developing world.
My hope is that we can navigate these challenges and opportunities together.
