What does Trump’s historic election victory mean for the global economy?

Donald Trump’s election victory over Vice President Kamala Harris marks a historic return to the White House — an extraordinary political return that is likely to have seismic ramifications for the global economy.

Speaking to supporters in Florida early Wednesday, Trump said a “strong and unprecedented mandate” would usher in America’s “golden age.”

The former president’s series of campaign pledges include heavy tariffs, tax cuts, deregulation and a push to withdraw from key global agreements.

Analysts say it is difficult to determine the extent to which Trump will seek to implement these measures in his second four-year term, but the consequences of any of them will have clear repercussions around the world.

It remains to be seen exactly what style of presidency investors can expect when Trump returns to the White House, said Lizzie Galbraith, a political economist at Aberdeen Asset Management.

“Congress has a really big role to play in this,” Galbraith told CNBC’s “Squawk Box Europe” on Thursday.

“If Trump has unified control of Congress, which seems very likely and is what we expect to happen over the next few weeks and days, then he will have more freedom to implement his tax-cutting agenda, his deregulatory agenda, for example.” But we are also likely to see elements of his trade policy alongside that.”

Regarding tariffs, Galbraith said there are currently two schools of thought. Either Trump will seek to use it as a bargaining tool to extract concessions from other parties – or he will follow through on his promise and implement it on a much larger scale.

He preceded Trump described “Tariff” is his favorite word, calling it “the most beautiful word in the dictionary.”

In an effort to raise revenue, Trump has suggested he could impose a blanket 20% tariff on all goods imported into the United States, with a tariff of up to 60% on Chinese products and a single tax. Up to 2,000% On vehicles made in Mexico.

Meanwhile, for the European Union, Trump said the 27-nation bloc would pay “Great price“For not buying enough American exports.

“Now, I think it’s worth pointing out that we think that in any situation where Trump uses tariffs very often, his primary focus is going to be on China. And we don’t see Trump’s secondary tariff pledge — that primary tariff,” Galbraith said. “It would hurt European companies – as far as it goes.”

“Therefore, it is not necessary to see something like a basic tariff applied that would hurt European goods, although there is still a distinct possibility that certain European products will be affected,” she added.

Analysts warned that Trump’s plan to impose global tariffs would likely raise prices for consumers and slow spending.

Ben May, director of global macro research at Oxford Economics, said the direct impact of Trump 2.0 on economic growth is likely to be limited in the near term, “but it masks significant impacts on trade and growth composition, and on financial markets.”

For example, May said that in a scenario in which the most extreme aspects of Trump’s policy agenda are adopted, especially regarding tariffs, the impact around the world would be “very significant.”

“The key unknown is whether the comprehensive campaign will increase the risk that the Trump administration will impose more extreme policy measures, such as larger, less targeted tariffs,” May said in a research note.

He added: “Uncertainty about Trump’s position on the conflicts in Ukraine and the Middle East also increases the risk of further instability in the two regions, which could negatively impact regional, and even global, growth.”

The prospect of a second Trump presidency has long been seen as negative for Europe and the EU more broadly.

However, “the magnitude of this reality remains underappreciated,” analysts at Signum Global Advisors said in a research note on Wednesday.

In fact, they argued that several factors mean the EU is likely to be the “biggest loser in a second Trump,” citing trade tensions, continuing frustration with key European policy decisions and Trump’s potential desire to double America’s advantage in attracting capital. transfer.

On the face of it, Trump’s election victory is “bad news for Asia,” especially China, but the region is “more prepared” than it was in 2016, when Trump first moved into the White House, analysts at Macquarie Group said Thursday.

“One of the key tenets of the Trump campaign was to increase tariffs,” the Macquarie Group analyst said in a research note. “Although this is well articulated, the headwinds that are likely to sweep across Asia, especially China, should lead to increased volatility and pressure.” Complications as uncertainty spreads.”

“The counterbalance to this is the potential acceleration in Chinese stimulus measures,” they added. “The Chinese government has already set its ambitions to support economic growth at the 5% level and address real estate market issues to support domestic consumer confidence.”

There will likely be some differences in Trump’s playbook this time, said Mitchell Rees, a US diplomat and distinguished fellow at the Royal United Services Institute (RUSI).

“I think President-elect Trump has said he wants to increase tariffs on China again so that the competition becomes even, from his perspective,” Reiss told CNBC’s “Squawk Box Europe” on Thursday.

“What was interesting about the last time Trump won was the number of China hawks who staffed his administration. This was a very difficult administration in terms of staff and in terms of their view of how they saw China as an adversary and expansionist in the South.” “The China Sea is inconsistent with American values ​​and friends and allies around the world.”

“So, I don’t think that’s going to change. I think that might be mitigated a little bit by the economic interaction that we have with China, but I think the relationship is going to be complex in the future.”