Moneycontrol Pro Weekender | Brave New World

Published 1 month ago• 6 minute read

The second Trump presidency is likely to be a watershed for the world. It’s not just about higher tariffs, or more protectionism, or about the strength of the US dollar, or whether inflation will be higher, or whether central banks will cut policy rates. These are all valid concerns, and the uncertainty hangs heavily on policymakers and markets. But far more important matters are at stake.

January 20th will mark not just the inauguration of Donald Trump as the president of the United States for the second time -- it will also end the system of international relations set in place after the Second World War. True, that system has long been in tatters. One by one, the institutions and treaties that underpinned it have been undermined and demolished—the UN and the WTO have long been toothless. But at least they were held up as the standard, and deviations and transgressions from their lofty ideals were viewed as special cases, as exceptions. Yes, it was mainly lip-service. But even during the height of the Cold War, the fight was portrayed as one between democracy and dictatorship—reasons apart from self-interest had to be dredged up to justify policies. Even when the US disregarded the UN, even when it invaded other countries, it claimed to be doing so in favour of a “rules-based order”. That mask has been slipping rather badly of late, but it will be completely whipped away on January 20th, displaying the unvarnished ugliness underneath, the naked self-interest, the unbridled lust for power. As someone wrote long ago, “all that is holy is profaned”.

Indeed, even the US domestic arena may witness a sea change, and outgoing US president Joe Biden, in a remarkable display of hypocrisy, warned in his farewell speech that a ‘dangerous oligarchy’ was forming in America under Donald Trump and that a "tech-industrial complex" could gain unprecedented power over the American people, threatening democracy by using an avalanche of misinformation and fake news. It’s no secret that the policies of Biden and his predecessors sharply widened inequality in the US and added to the power of the oligarchy. But even FT columnist Martin Wolf has posed the question: ‘Will US democracy survive Trump’s second presidency’?

Saibal Dasgupta wrote that, in the Trump era, stripped of all ideological pretensions, 'might is right' will be the new geopolitical mantra. The powerful can now openly covet the territory even of their allies, without blinking an eyelid, as Trump’s disparaging remarks about Canada prove. It matters little that Canada has always toed the US line—subservience apparently is no longer enough.

Donald Trump wrote on X, “Members of Congress are getting to work on one powerful Bill that will bring our Country back, and make it greater than ever before. We must Secure our Border, Unleash American Energy, and Renew the Trump Tax Cuts, which were the largest in History, but we will make it even better - NO TAX ON TIPS. IT WILL ALL BE MADE UP WITH TARIFFS, AND MUCH MORE, FROM COUNTRIES THAT HAVE TAKEN ADVANTAGE OF THE US FOR YEARS. Republicans must unite, and quickly deliver these Historic Victories for the American People. Get smart, tough, and send the Bill to my desk to sign as soon as possible. MAKE AMERICA GREAT AGAIN!” The problem is that for America to be great again, other countries must become less great.

It’s not just China that is the target here, allies too will have to pay for protection. It’s a lesson for all nations to build up their own economic and defence capabilities and the devil take the hindmost. It’s the 1930s redux, but with nuclear weapons. As for co-operation on combating climate change or treaties limiting nuclear weapons, all that will be thrown out of the window.

Little wonder that policymakers are on tenterhooks and markets are in limbo. The US markets in particular can’t seem to make up their minds whether Trump loves them, or loves them not. As this song put it, the markets are agonisingly asking, ‘He loves me a little, he loves me a lot/Loves me in the middle, does he love me or not?’

That is unsurprising. As Ananya Roy wrote, the Trump inauguration “is anticipated to pave the way for unpredictable and potentially drastic policies on business, immigration, and tariffs”.

Not all is doom and gloom, though. Trump has said he will stop the Ukraine war, though his pick for Treasury Secretary has said he might ramp up sanctions against Russia to bring them to the negotiating table. Nevertheless, Trump must have had a hand in the proposed ceasefire in Gaza, which would be an unalloyed good. As the poet Mahmoud Darwish wrote,

“The war will end.

The leaders will shake hands,

The old woman will keep waiting

for her warrior son.

The young woman will wait

for her beloved husband,

and the children will wait

for their hero, Dad.

I do not know who sold the country

but I know who paid the price.”

Cheers,

Manas Chakravarty

In case you missed them, here are some of the stories and insights we published this week, apart from our technical picks in the equity, commodity and forex markets:

Infosys, LTI Mindtree, Ceat, Ixigo, eMudhra, SP Apparels, Cera Sanitaryware, Himadri Speciality, Laxmi Dental IPO, D-Mart, HCL Tech, Intellect Design Arena, PCBL, RIL, Axis Bank, Weekly tactical pick