Trump’s Second Inauguration: What It Means

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Source: The New York Times and Financial Times newspapers on the stand in Paris, France – The Now Time
Published on November 7, 2024 in Paris, France

Donald J. Trump has been inaugurated as the 47th President of the United States for a historic second, non-consecutive term. As the first president since Grover Cleveland to achieve this, Trump’s second term promises significant changes, not just for the U.S., but also for the global economy, technology, and geopolitics.

Post-2020 and Building the Foundation

Trump’s Save America PAC played a crucial role in influencing Republican politics, endorsing candidates and shaping the GOP’s direction with a focus on key issues such as immigration, tax reforms, and trade.

Trump’s economic populism resonated with many Americans, especially those dealing with the impacts of inflation and globalization. This resulted in his successful 2024 comeback with rallies and media presence cultivated support, and as a result, he took office in January 2025 with a clear mandate to push his nationalistic “America First” agenda.

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2025: The Impact of Trump’s Policies

Economic Policies and Global Trade

Tariffs on China: The Trade War Continues The U.S. – China trade war will remain a central focus of Trump’s economic strategy. Trump’s America First approach sees tariffs on Chinese goods as a way to protect American industries and push for fairer trade deals. Specifically, tariffs on technology imports (such as semiconductors and electronics) will impact global supply chains, raising the cost of consumer goods in the U.S.

Trump’s America First approach uses tariffs on Chinese goods to protect American industries and push for fairer trade deals. These tariffs will disrupt global supply chains, creating deadweight loss — an economic inefficiency where supply and demand are not in equilibrium. This will raise the cost of consumer goods in the U.S. Additionally, as exports from China decrease, living costs in China will also rise.

These tariffs not only affect the U.S. but also global markets dependent on Chinese goods, particularly in industries like electronics and renewable energy that rely on Chinese-made components. As China is a major supplier of rare earth metals and key technologies, any disruption in trade will raise costs and create uncertainty across international supply chains. The China-U.S. relationship could sour further, leading to retaliatory tariffs that impact U.S. exports, such as agricultural products, causing ripple effects in global markets.

Efforts to move operations out of China, particularly to India, Vietnam, and Mexico, will diversify global supply chains. While this reduces dependence on China, it may increase production costs and logistical complexities for businesses worldwide. As companies shift to new locations, the cost of goods may rise in both emerging and developed markets, impacting global prices and competition.

Additionally, he plans to lower taxes for the middle class to boost domestic consumption, will this cover the costs of tariffs?

• Focus on Domestic Energy: Trump’s administration is expected to push for greater energy independence through fracking, offshore drilling, and the possibility of reopening of pipelines such as Keystone XL.
  
• Economic Growth: Despite higher inflation, tax cuts and deregulation may fuel economic growth, creating jobs in manufacturing but also potentially raising costs for the average American consumer.

Inflation and Interest Rates Trump’s pro-business policies could increase inflation, particularly through tariffs and energy policies. The Federal Reserve may keep interest rates high to counteract rising inflation, but that could dampen overall economic growth. The U.S. may face an inflationary cycle similar to the one seen in the 1970s.

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Geopolitical Tensions: Trade Wars, NATO, and the Middle East

Sanctions on Chinese Companies: To further escalate the trade war, additional factors such as sanctions on companies like Huawei and ZTE could intensify tensions between the U.S. and China. These companies are likely to face continued restrictions on technology access, especially in critical areas like 5G infrastructure and artificial intelligence (AI). Such sanctions could significantly disrupt global supply chains and technological development, particularly in the telecommunications and electronics sectors. This may lead to delays in 5G rollout worldwide and impact the availability of key components in consumer electronics, creating ripple effects across the global tech market. The sanctions could also encourage China to accelerate its efforts to develop homegrown alternatives, potentially reducing dependence on U.S. technology, but also leading to further market fragmentation and geopolitical tension.

However, there are loopholes in the system that may undermine the intended effects of the tariffs. Rather than fully restricting technology, these actions could simply raise prices through workarounds. Companies may bypass tariffs by sourcing components from third-party countries, avoiding direct restrictions while still accessing Chinese-made technology. Additionally, grey market channels could emerge, rerouting goods through countries with looser trade restrictions, driving up consumer prices without effectively limiting China’s technological dominance. These loopholes are economic inefficiencies, they create higher costs for consumers without achieving the intended impact on China’s market influence.

Trump’s Middle East policy will focus on securing U.S. interests while reducing military involvement in the region. He aims to strengthen ties with key allies, particularly Israel and Saudi Arabia, prioritizing their security and bolstering their defense capabilities. Trump’s approach could see a continued emphasis on counterterrorism efforts, with support for regional allies like Israel against Iranian influence and Saudi Arabia in the face of threats from Iran-backed groups.

Expect further steps toward military disengagement from areas like Syria, as Trump continues his stance of reducing U.S. troop presence in conflict zones and emphasizing a more America-first approach to foreign interventions. While maintaining influence in the region, Trump is likely to push for more burden-sharing by allies, encouraging them to take a more active role in regional security, this could involve arms sales, intelligence sharing, and military cooperation to ensure U.S. interests are protected without deep involvement in long-term conflicts. However, this strategy may also risk alienating traditional U.S. allies who expect stronger commitments, leading to potential shifts in regional dynamics.

• Israel and the Abraham Accords: Trump will maintain his support for the Abraham Accords, which facilitated peace agreements between Israel and several Arab states during his first term. By continuing to champion these deals, he aims to solidify the U.S. as a key mediator in regional peace efforts. However, his approach is likely to maintain a pro-Israel bias, prioritizing Israel’s security and interests, which may influence the dynamics of future negotiations and the broader Middle East peace process.

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Technology, Innovation, and Collaboration with Billionaires

We have the following in focus for the current and year and forward.

• AI Investments: Expect major funding for AI startups, especially in areas like machine learning, data science, and AI ethics. This initiative will likely involve collaboration between the government and tech giants like Google, Amazon, and Microsoft.
  
• Quantum Computing: A major push to accelerate research in quantum computing will position the U.S. ahead of China and Europe in this vital technology. Collaborations with firms like IBM and Intel are expected to dominate the tech landscape.
  
• Crypto Regulation & Crypto Czar: With the appointment of a new Crypto Czar, Trump is signaling a more favorable view of cryptocurrency, aiming to foster innovation in blockchain technology and digital assets while creating a regulated environment to ensure investor protection.
  

Under Trump, expect continued funding for SpaceX and partnerships between the U.S. government and Musk’s space programs with a focus on Mars exploration, space tourism, and lunar colonies while Tesla, led by Musk, will likely receive further government support to expand electric vehicle production and battery storage systems in the U.S.

In addition to this Trump has maintained strong relationships with influential billionaires such as Jeff Bezos (Amazon, Blue Origin), Peter Thiel (Palantir, Founders Fund), and Larry Ellison (Oracle), all of whom are expected to collaborate on advancing technology, space exploration, and AI under his 2025 agenda, further solidifying his ties with Silicon Valley and pushing for innovation, job creation, and global competitiveness.

Government Restructuring: Will it Happen?

Trump’s administration is also expected to push for a restructuring of government. Whether this involves scaling back the federal bureaucracy or consolidating certain agencies, Trump has long called for a smaller, more efficient government. This could involve:

Donald Trump’s approach to environmental policies during his first term included withdrawing the U.S. from the Paris Agreement, arguing that it placed the country at an economic disadvantage by requiring emission reductions while allowing developing nations like China and India to increase their emissions. Although President Joe Biden rejoined the agreement in 2021, it’s unclear whether Trump would seek to exit again if elected for a second term. Additionally, Trump’s pro-business stance may lead him to push for reducing the size of the Environmental Protection Agency (EPA) and eliminating regulations he views as obstacles to job creation, further aligning with his “America First” approach to prioritizing economic growth over environmental concerns.

Trump has also been highly critical of the Federal Reserve’s interest rate policies. There could be efforts to curtail its influence in favor of more direct government control over economic policies.

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Conclusion: A Year of Transformation

Trump’s second term promises to be transformative for both the U.S. and the world. With his bold economic policies, global trade shifts, and technological advancements in AI and quantum computing, 2025 will mark a new chapter in American governance. However, challenges such as inflation, global trade wars, and political resistance remain in the backdrop.

For investors, the key here will be navigating the uncertainty around inflation, interest rates, and the global economy while capitalizing on opportunities in defense, energy, and technology sectors together with a rising acceptance of cryptocurrencies.

Now more than ever, we see a polarization in investment strategies.

However, there’s a growing concern over the overvaluation of companies in these emerging tech sectors, as expectations may be too high. Effective risk management and market research will be key in navigating this uncertainty and separating hype from real potential. Additionally, it’s important to remember that even though low-risk strategies tend to have lower volatility, they can still experience downturns in the short term. Therefore, these investments are best held over a longer period, typically 5 to 10 years, to smooth out fluctuations and capture steady growth.

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References

Reference Note

The following sources have been used throughout this post. Each statement corresponds to the views and insights of the original authors. While efforts have been made to maintain an unbiased and objective approach, some perspectives may appear to favor specific political stances or viewpoints. The sources reflect the most current analysis and information available as of January 20, 2025.

• Al Jazeera (Qatar) – Fetched 2025-01-20
• BBC News (UK) – Fetched 2025-01-20
• Bloomberg (USA) – Fetched 2025-01-20
• CoinDesk (USA) – Fetched 2025-01-20
• El País (Spain) – Fetched 2025-01-20
• Forbes (USA) – Fetched 2025-01-20
• Haaretz (Israel) – Fetched 2025-01-20
• Handelsblatt (Germany) – Fetched 2025-01-20
• La Stampa (Italy) – Fetched 2025-01-20
• Le Figaro (France) – Fetched 2025-01-20
• Le Monde (France) – Fetched 2025-01-20
• Nikkei (Japan) – Fetched 2025-01-20
• Reuters (UK) – Fetched 2025-01-20
• TechCrunch (USA) – Fetched 2025-01-20
• The Economist (UK) – Fetched 2025-01-20
• The New York Times (USA) – Fetched 2025-01-20
• The Washington Post (USA) – Fetched 2025-01-20
• Xinhua News (China) – Fetched 2025-01-20
• Zacks (USA) – Fetched 2025-01-20

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