Trump 2.0’s ‘America First’ agenda might not bode well for the developmental landscape, with slashed funding for aid and multilaterals
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This article is part of the series, "Reignited agendas: Trump’s return and its global repercussions"
Donald Trump’s comeback as the 47th president of the United States of America (US) is at a significant juncture in international politics. By running a campaign that revolved around ‘Making America Great Again,’ Trump defeated the Democrats for the second time by breaking through the “blue wall”. In contemporary geopolitics, America is viewed as one of the prominent poles of power. Yet, a sense of dissatisfaction and disillusionment has been looming large over the American population. Their country seems to be losing in the wake of globalisation, whereas other developing economies are gaining. This is the emotion Trump’s campaign tapped into.
However, Trump’s re-election, as reiterated by several political analysts, brings with it a host of challenges. With the developmental landscape fraught with multiple roadblocks—trade wars, surging inflation, rising debt, the breach of data privacy, biodiversity loss, climate change, the disruption of global supply chains and environmental degradation—American participation and leadership can possibly make or break the geopolitical chessboard. Known for his unpredictable political decisions and sweeping statements—a complete contrast to his predecessor Joe Biden—developmental issues under the Trump 2.0 administration will potentially witness some crucial shifts.
The main question is—can Trump foster partnerships, build steady collaborations and push sustainability for America and the world?
Despite the global community emphasising the creation of cooperative frameworks, economic fragmentation may be propelled yet again under Trump 2.0. At the outset, Trump has maintained that the much touted ‘American First’ policy will be placed firmly at the forefront of his plans. This also implies the return of trade barriers, restrictions, upgrading tariffs and protectionism, much like his previous stint. During his election campaign in October 2024, Trump mentioned that, “To me, the most beautiful word in the dictionary is ‘tariff’”. He went on to propose “a 20 percent blanket tariff on all imports, tariffs of at least 60 percent on products from China, 100 percent tariffs on nations that shift away from trading with the dollar, and a 2,000 percent tariff on vehicles built in Mexico.” Trade deterrence looks to be the primary highlight of his foreign policy outlook.
Despite the global community emphasising the creation of cooperative frameworks, economic fragmentation may be propelled yet again under Trump 2.0.
Naturally, development partnerships also get impacted in the long-run. As reported by Devex forecast, the United States Agency for International Development’s (USAID) recent budgetary slashes were around US$ 4.8 billion in April 2024. Given America’s steady leadership as one of the largest development providers (second only to the European Union), reduction in development aid is a likely possibility. Political analysts observe that the USAID budget under Trump’s first stint was pegged at US$ 20 billion in 2018, which swelled up to US$ 44 billion in 2023. Further, the connection being drawn between Trump’s political priorities and the controversial Project 2025—a conservatives roadmap hoping to guide Trump’s second term in office—is quite stark. If one closely follows Project 2025, there are references to budgetary reductions in development and foreign assistance.
In this sense, the sustainable development agenda is also at risk. Trump’s notorious withdrawal from the Paris Climate Agreement in 2020 is significant in this regard. Although the Biden administration managed to put America back in the sustainability game, it is likely that Trump might aim to undo this move. Further, experts are also predicting a “roaring” comeback of fossil fuel production, along with a lacking federal climate policy. Trump’s clear support of fossil fuels could potentially impact America’s emissions reduction pathways and its investment in clean energy initiatives.
There is also a fear that multilateralism will be crippled further under the new administration. It has been reported that Trump aims to cut down, or even withdraw, American funding to multilateral bodies and development financing institutions (DFIs) like the World Bank and the International Monetary Fund (IMF). Instead, it would look for opportunities to offer humanitarian or economic assistance unilaterally, bypassing “middle-parties” or agencies that might not align with broader US interests.
Trump aims to cut down, or even withdraw, American funding to multilateral bodies and development financing institutions (DFIs) like the World Bank and the International Monetary Fund (IMF).
This also casts a shadow on a number of multilateral, minilateral and plurilateral economic groupings that the US is a part of, such as the India-Middle East-Europe-Economic Corridor (IMEC), the Indo-Pacific Economic Framework for Prosperity (IPEF), I2U2 (India, Israel, United Arab Emirates and the USA) and the QUAD (Australia, India, Japan and the USA). Despite being announced with much fanfare during India’s G20 presidency, the future of IMEC was stalled due to the Middle East crisis. Financing this corridor remains a major question mark. Trump’s draconian aid laws and trade sanctions would add to difficulties.
For India and the larger Global South, Trump 2.0 administrative measures should be viewed cautiously. Although Trump’s cabinet selection is composed of anti-China hawks, the American outlook on strengthening global solidarity hinges primarily on intensifying its competition with Beijing. Naturally, the US can afford to openly attack China economically. For India to do the same, however, is difficult. India shares a considerable land border with China, and is pressured by Beijing’s economic heft. In this sense, Trump’s hard line on China might actually work in India’s favour, since it is grappling for solutions to increase investments in its manufacturing, digital, healthcare and other sectors. Additionally, tensions in the South China Sea are escalating—Beijing is taking control of undersea cable infrastructure and rare earth minerals, breaching cyber security, and investing in large-scale infrastructure projects under the Belt and Road Initiative (BRI). However, it needs to be understood that the challenges faced by the Indo-Pacific are multi-pronged, representing a mix of developmental and security bottlenecks. While the latter is certainly running high on Trump’s agenda, the former may not be. As the world moves towards the 2030 deadline, the Global South may not have high expectations from President Trump, but it will be vigilant of his moves in the coming years.
Swati Prabhu is Associate Fellow with the Centre for New Economic Diplomacy at the Observer Research Foundation.
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Dr Swati Prabhu is Associate Fellow with the Centre for New Economic Diplomacy at the Observer Research Foundation. Her research explores the interlinkages between development ...
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