"Trump's Second Term Raises Global Inflation Concerns"

"Not Only the US but Also Asia and Europe Affected"

Former U.S. President Donald Trump’s re-election could lead to rising costs worldwide and a resurgence of global inflation due to his 'America-first' policy.

On the 16th (local time), Michael Metcalf, Head of Macro Strategy at State Street Global Markets, appeared on CNBC's 'Squawk Box Europe' and stated, "Trump’s policies pose a greater risk of causing more inflation in a second term than in his first term."

Former U.S. President Donald Trump [Photo by EPA Yonhap News]

Metcalf explained, "Compared to 2016, when inflation and inflation expectations were low, 2024 and 2025 will be very different. Inflation levels are higher, inflation expectations are higher, and we are in an inflation mindset."

CNBC noted that this could affect prices not only in the U.S. but also in Asia and Europe.

Recently, geopolitical tensions between the U.S. and China have escalated, with both President Joe Biden and former President Trump indicating they would raise tariffs on China. However, a recent Wall Street Journal (WSJ) survey of economists found that under Trump’s hardline protectionist policies, inflation would be higher.

Gareth Nicholson, Chief Investment Officer (CIO) at Nomura, said, "Inflation could spread to Asia as well," and predicted, "Trump’s election would be a negative risk factor for Asian stock markets overall." He added, "From a macro perspective, this would cause inflation (possibly stagflation) in the global economy and accelerate more supply chain changes within Asia." He also noted that some companies are diversifying production to mitigate tariff impacts.

Goldman Sachs projected that if Trump is elected, tariff increases would burden global trade and could raise European inflation by 0.1 percentage points.

Mark Franklin, Senior Portfolio Manager at Manulife, said, "Additional tax cuts by Trump and a review of China tariffs could lead to reflation (expansionary fiscal policy and accommodative monetary policy)," adding, "As a result, inflation expectations would rise, and we would see 'curve steepening'?a sign of rising interest rates as the yield curve becomes steeper."