The following insights are taken from a masterclass delivered on January 19, 2025 by CEIBS Professor of Economics and Finance and Wu Jinglian Chair Professor in Economics Xu Bin.
Swept back into power after another tense election resulting in a stronger majority than his 2017 bid, Donald Trump was sworn into office for a second presidency on January 20, 2025.
Polarising, unpredictable, and all but impossible to second guess, what will the 47th President of the United States attempt to achieve this time around? Equally, what will his return mean for America's long-standing allies, trade partners and rivals?
01
A "New Moment"… Moment?
If we flash back to 2017, China was an early focal point of Trump's first presidency. Mere months after assuming office, he invited President Xi Jinping to his Mar-a-Lago resort in Florida for an official visit. Despite these positive diplomatic overtures, Trump didn't hesitate to launch into a trade war with China in early 2018, declaring a "New Moment" for America and marking that moment with the imposition of heavy tariffs on Chinese imports.
This was a singular lesson that even for a relative political newcomer like Donald Trump, a US president quickly finds that realpolitik often trumps personal inclinations or interpersonal relations between leaders. Trump was elected on the premise of "shaking up" the political establishment and, above all, strengthening America's position at home and abroad.
This time around, however, Trump is not the same person. He has been president for four years, a central Republican Party power broker for eight years, and has survived an assassination attempt. While many of his supporters and detractors see much of the same energy and demeanour in him, these experiences have undoubtedly influenced his worldview. This may play a crucial role in his decisions as he attempts to stamp his seal on American politics and economics.
02
How will Trump Behave during his 2nd Term?
Donald Trump's new presidency will adhere to the following four main characteristics and priorities:
Conservatism as foundation, "businessman style" as a tool
Efficiency as the priority, "right" as the direction
Return to the Ronald Reagan Doctrine to build strength of the nation
Appoint officials with conservative beliefs and of young age
Trump has said repeatedly that his near assassination has led him to believe more fervently in God. While this may clash with his well-documented ego and potentially create a slightly humbler Trump 2.0 presidency, conservatism remains his base and his intended direction to steer American politics and the nation's broader culture.
Trying to emulate his idol, Ronald Reagan (another president who successfully survived being shot by a would-be assassin) means adhering to conservatism economically speaking as well. Reagan famously said: "Government is not the solution to our problem; it is the problem." This is a point Trump has seized upon, promising to overhaul major US Government departments and institutions to boost efficiency and streamline the very process of state-based administration as a means of building America's economic strength.
While this has already generated plenty of social media "noise" centering on Elon Musk and Vivek Ramaswamy, the deeper significance is that Trump is serious about prioritising government efficiency, and appears unafraid to gut major departments to achieve it. Further signs of his admiration for the Reagan Doctrine are early indicators that he intends to rein in government spending, with the US military and NASA being notable exceptions.
While looking back to the Reagan Presidency for inspiration, Trump also has his eyes on the future. Looking at his appointments to key positions in the cabinet and other essential posts, there is a clear pattern of choosing younger appointees who share his political outlook and may form part of his legacy by wielding influence once his term ends.
03
Signs of a New Trump
Despite having the baggage of voter expectations and an uncertain global business landscape to navigate, there are already some signs that we can expect a different Donald Trump this time around.
Firstly, a lighter, less imposing stance on China trade tariffs could be part of the Trump agenda. The Washington Post reported on January 6, 2025 that aides to President-elect Trump are exploring a tariff plan that only targets key imported goods, a major shift from Trump's promise during the 2024 presidential campaign.
Trump quickly refuted the news, calling it "another fake news story", but, crucially, did not jump to either fire or reassign aides – a move more in keeping with the Trump 1.0 presidency. Equally important is the freezing out of Robert Lighthizer, the former US trade chief who was also the architect of Trump's protectionist first-term trade agenda. Lighthizer has not been given any appointment so far, signaling a more fluid, flexible Trump presidency regarding trade.
On immigration, Trump has also shown capacity for change. He has made a U-turn on the H-1B policy, which allows temporary visas for companies to bring in high-skilled workers from abroad. This is in stark contrast to the restrictive policies of his first presidency, the product of a blanket anti-immigration stance.
While more concrete actions are needed before we can determine the governing characteristics of the Trump 2.0 Era, these signals are important in underlining how realities change over time, and even the most unyielding of politicians can reinvent themselves when their priorities shift.
04
How will Trump 2.0 Impact China's Economy?
When Donald Trump left the White House in 2021, his tariffs on Chinese goods broadly remained in place. The Chinese economy has been dealing with US protectionism as a reality for the past eight years, and it has left its mark.
Last year, Mexico overtook China as the largest importer to the US. While there are plenty of US companies sticking with their Chinese suppliers to retain their deep supply chain advantages, key industries have been looking elsewhere to make up the shortfall. China's steel exports to developing economies like India, Vietnam and Brazil have surged, highlighting the growing importance of smaller partners to China's long-term economic prospects. However, the return of Trump will likely cause another sharp decline in China's exports to the US, and these smaller economies cannot hope to bridge the gap.
In good times and bad, the utmost priority for the Chinese Government is always the same – ensure stability. This applies doubly to the economy. Accordingly, the Chinese Government will prioritise the stability of the exchange rate over seeking out new ways to boost export growth.
This will in turn lead to two actions – a radical expansion of fiscal and monetary policy, and an acceleration of "dual transformation", strengthening independent innovation on the supply side, and cultivating domestic consumption on the demand side.
Such a transformation of both policy and wider economic strengths in the Chinese economy will not be painless, but it does appear necessary in the face of a prolonged period of US protectionism and a global emphasis on leveraging emerging technologies to drive economic efficiency.
05
How can Chinese Companies Adapt to this New Reality?
Keep up with technological trends and be sensitive to areas that the Chinese Government attaches importance to. Examples include electric vehicles, AI, battery technologies, and high-skilled talent attraction. Position yourself for the arrival of an economic expansion /inflation period. New fiscal/monetary policy will create all manner of new business opportunities. Strengthen your overseas investments and asset allocation practices. This will improve your overall risk management position. Grasp the difficulty of China's economic transformation, especially on the demand side of domestic consumption, and adjust your business offering to accommodate it.
06
Insights from the Panel Discussion – The Industry Perspective
After Professor Xu Bin's address, Richard Hong from Global EMBA 2016 Cohort moderated a panel to further explore how Chinese companies can prepare themselves for operating in the Trump 2.0 Era. The panel agreed that the return of Donald Trump will present challenges for Chinese companies that rely on predictable economic conditions and trade relations with the US, but this may be the necessary push they need to seriously pursue other markets as part of a broader globalisation strategy.
"There is more of an incentive for Chinese companies to go abroad, more of a push. A second Trump presidency can only accelerate that trend as Chinese exports will need to find new avenues, new routes to market. Chinese firms should be looking at this as China + 1 in reverse; they cannot rely on any single market, even the Chinese domestic market, to sustain their prospects indefinitely. It is a risk diversification move that's necessary for these very risky times." – concluded Richard Hong, Head of Strategic Clients (Greater China), Bloomberg (Global EMBA 2016)
"Larger Chinese corporations, particularly SOEs, have such tangible power, talent and finances, that when they expand abroad, they often underestimate local stakeholders outside their organisation. They will have to 'relearn' how to collaborate in a balanced way, rather than expecting the local situation to bend to their will. Coming in as good-faith partners is the key to building new markets." – Julien Boussu, CFO China, Knorr-Bremse Rail (Global EMBA 2017)
"Don't try to export the same strategy to each new country; each market context is unique and needs its own appropriate approach. A major piece of this puzzle is local talent acquisition and retention, that's an area a lot of Chinese CEOs are concerned about. That's why we're seeing diversity and inclusion entering the language of Chinese companies' corporate values more regularly. However, you must live it, not just say it, if you want to adapt properly to the local context." – Annabella Cao, Senior HR Vice President, Bosch Group (Global EMBA 2018)
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