Potential Global Inflation Surge Feared with Possible Second Trump Term

The possibility of a second term for former President Donald Trump is raising concerns among analysts, who predict that his “America-first” policies could lead to a surge in global inflation. Analysts are warning that Trump’s re-election could have inflationary consequences, CNBC reported. Trump’s first term, characterized by high tariffs and low taxes, could have an even more pronounced inflationary effect if repeated. Michael Metcalfe, head of macro strategy at State Street Global Markets, expressed that there is a bigger risk that Trump’s policies will be more inflationary in a second term than they would have been in the first. He highlighted that compared to 2016, when inflation had been low, the prospects for 2024 and 2025 are different.

Analysts are concerned that a second Trump term could lead to price increases both domestically and internationally, especially in Asia and Europe. Nomura‘s Gareth Nicholson pointed out that Asia could also be affected by increased inflation caused by Trump’s policies. The potential increased inflation could impact Asian stocks, described as an overall “negative risk factor” for the region, according to reports. Furthermore, Goldman Sachs forecasted a potential 0.1 percentage point rise in inflation in Europe if Trump were to serve a second term, citing increased tariffs affecting global trade.

Trump’s potential re-election has also sparked apprehensions about heightened tariffs on China, further contributing to global inflation. Economists, in a recent poll, projected higher inflation under a second Trump term due to his staunch protectionist stance. The financial world is keeping a close eye on the potential implications of a second Trump term, with concerns raised about its impact on the economy, stock market bubble, and other broader economic factors. Economists suggest that there could be a surge in inflation, deficits, and interest rates should Trump win the 2024 election, representing a significant shift from the policy trajectory expected under President Joe Biden’s administration.