U.S. President Donald Trump’s second term began on Jan. 20 with a grand ceremony that captured the world's attention. The event, attended by influential billionaires like Elon Musk, Jeff Bezos and Mark Zuckerberg, symbolized the growing intersection of politics and big business. Musk played a key role in Trump’s reelection efforts, and other corporate leaders helped finance the inauguration. While the government’s support for business is often seen as beneficial, the increasing sway of large corporations over political decisions raises troubling questions.
From the perspective of rent-seeking theory, large corporations – motivated by the pursuit of greater profits – often leverage government power to secure advantages. They lobby for favorable regulations, tax policies and other changes that primarily benefit them, sometimes at the expense of the public and small businesses. Economists, from Adam Smith to contemporary scholars, have long warned of the dangers posed by corporate influence over government, and Trump’s presidency seems to validate these concerns.
One of the most controversial issues during Trump’s presidency is his approach to trade. His recent threats to impose tariffs on countries like Mexico, Canada, China and European Union nations are rooted in protectionist policies that risk triggering retaliatory tariffs. These trade wars, echoing those of the 1920s and 1930s, could harm global trade and hurt American exports. More than a risk to the free trade system in North America, such policies jeopardize the global liberal trade system that emerged after World War II. The World Trade Organization (WTO) – which succeeded the GATT in 1995 and now includes nearly 170 member countries – could see its role as the administrator and arbiter of international trade undermined. If the United States disregards trade agreements, it risks damaging both the WTO’s credibility and its own leadership in global trade.
The economic consequences of Trump’s policies are likely to affect American consumers and businesses. Higher tariffs will raise the prices of imported goods, burdening consumers with higher costs and affecting businesses that rely on foreign inputs. The retaliatory tariffs will also negatively affect American exporting companies. While some domestic industries might benefit from protectionist measures, overall economic inefficiency could increase as resources are diverted to less competitive sectors. Furthermore, while tightening immigration policies might benefit low-skilled American workers in the short term, it could lead to higher service costs, particularly in industries reliant on immigrant labor. In the U.S., many farms depend on immigrant workers; if they leave, the cost of agricultural production will also increase.
The international political system is also undergoing significant change. The bipolar world of U.S.-Soviet rivalry gave way to a brief unipolar moment with U.S. dominance in the 1990s. Today, the world is shifting toward a multipolar system, where emerging powers assert their influence. Trump’s actions, such as proposing the annexation of Greenland, pressuring Panama over the canal and suggesting that Canada become a U.S. state, signal a new direction in U.S. foreign policy. Meanwhile, Russia exerts pressure on neighboring countries, and China continues its push toward annexing Taiwan. The EU may gradually distance itself from the U.S., seeking a more independent foreign and security policy. As regional powers focus on expanding their spheres of influence, U.S. pressure on other nations, like Iran, has pushed them closer to Russia and China, further complicating global geopolitics.
Trump’s decision to withdraw from the Paris Climate Agreement and the World Health Organization (WHO) has raised alarms worldwide. The U.S. has long been a leader in fostering international cooperation on critical issues like climate change and global health crises. Without U.S. leadership, these efforts risk losing momentum, weakening global cooperation on issues that require urgent collective action.
However, there are also hopes tied to Trump’s foreign policy. There is potential for him to prioritize peace and diplomatic solutions, especially in resolving conflicts like the war in Ukraine and the Israeli-Palestinian conflict. Yet, his recent remarks about relocating Gazans to neighboring countries have raised concerns among Egypt, Jordan and other Middle Eastern nations. These statements suggest that Trump may not be pursuing a fair, lasting peace in the region but rather aligning with Israel’s expansionist goals. If the Trump administration can successfully broker peaceful resolutions to these conflicts, reduce tensions in Asia (such as the North-South Korea situation and the China-Taiwan crisis) and continue to foster a strong U.S. economy, such developments could bolster global economic growth and trade, offering a more stable and prosperous future.
As Trump embarks on his second term, the world remains divided between hope and concern about the path ahead. A year from now, the global community will have a clearer understanding of whether his presidency will foster peace and prosperity or deepen divisions and uncertainty.