MAGA Effect Outside the US: Global Reactions and Implications

Context:

This analysis is based on exploring how US President Donald Trump’s "Make America Great Again" (MAGA) policies, particularly aggressive tariffs, are influencing global economies as of March 17, 2025.

1. MAGA’s Tariff Strategy: Trump’s push for high tariffs aims to boost US manufacturing but risks backfiring by weakening domestic demand and economic growth, contrary to the intended "America First" outcome.
2. Global Economic Shift: The Rest of the World (ROW) is capitalizing on this, with countries like China, India, and Europe adapting to benefit from redirected trade and investment flows.
3. China’s Response: China is countering US tariffs with domestic consumption drives and deeper trade ties with Asia and Africa, reducing reliance on the US market.
4. India’s Advantage: India benefits from a stronger rupee (from 87.5 to 86.5 against the dollar) and increased exports, positioning itself as an alternative manufacturing hub amid US-China trade tensions.
5. Europe’s Adaptation: The EU is focusing on internal demand and defense spending, leveraging the euro’s rise (from 1.0277 to 1.0919 USD) to strengthen its economic resilience.
6. US Economic Strain: High tariffs and budget cuts under MAGA have led to a projected US GDP decline (2.4% in 2024 to 1.2% in 2026), driving capital outflows and a weaker dollar.
7. Global Trade Realignment: ROW nations are forging new trade pacts and supply chains, exploiting the US’s inward focus to their advantage, potentially sidelining America in global trade networks.
8. Implications for India: India must navigate this shift by enhancing trade agreements (e.g., with EU, ASEAN) and bolstering domestic industries to sustain export growth and forex stability.

Link To The Original Article – https://indianexpress.com/article/explained/maga-effect-outside-us-9892943/