What now?

Donald Trump will be the next US President. There are many reasons why this outcome is bad. Trump’s policy proposals may stimulate the economy in the short run-simply because he has proposed increasing government spending and decreasing taxes-but in the long run, they will lead to a larger government debt for no good reason. This, in turn, could increase the interest rates at which the US borrows. But, ultimately, debts need to be repaid, so lavish spending now means higher taxes and/or lower government spending in the future. Since our lawmakers appear unable to deal with long-term problems until they become acute (exhibit A is Medicare and exhibit B is Social Security), these changes could end up being quite sudden and disruptive for the economy.

But the problems above are unlikely to materialize during the second Trump term, partly because the current debt situation is stable enough that ignoring it for 5–10 more years is likely to appeal to policymakers more than solving it. The more acute problems are international. How will Trump deal with Russia, China, North Korea, and Iran?

Here the news is not good. My personal assessment is that the risk of additional wars is the highest it’s been in decades. First, there’s Russia and Ukraine. The worst possible scenario is that Trump puts pressure on Ukraine to cede territory to Russia, accept neutrality (without real security guarantees because I’m pretty sure no Western country would actually be willing to provide them), etc., and Ukraine accedes out of necessity. While many Trump supporters will say they are happy with this outcome, they should not be. Russia is on an imperialist quest, as evidenced not just by its war on Ukraine, but by its attempts to control Georgia and Moldova. These countries would be the obvious next targets for Russia. And if Russia decides that NATO is sufficiently weak that the promise of “an attack on one is an attack on all” is not credible, it may pursue a juicier prize such as Poland. Even though Russia is not in a position to do so now, thanks to Ukraine’s effective fighting, a few years of oil revenue and soldier training plus taking fuller advantage of the alliance with Iran, China, and North Korea, could get Russia back in fighting shape.

Second, there’s the Middle East. This is perhaps where Trump can do the least damage on the margin because the situation is already pretty bad. But part of the reason it’s bad is because of Russia’s consistent support of terrorist organizations and authoritarian regimes there. Given that Russia will be even more unchecked going forward, I see very little possibility of positive developments in the Middle East, although I’m going to refrain from making any specific predictions.

Third, there’s China and Taiwan. On one hand, you might think that because Trump doesn’t like China, his election reduces the chances that China tries to take control of Taiwan. But the problem with this logic is that Trump has no problem with China being an authoritarian regime per se. He just wants to reduce US imports from China. So I wouldn’t put it past him to “trade” Taiwan to China in exchange for China not retaliating for higher tariffs or something along these lines.

Finally, we have North Korea. South Korea is understandably unhappy with North Korean soldier in Ukraine and tensions between the two countries can only escalate. How Trump would respond to an armed conflict between South and North Korea is anyone’s guess. On one hand, South Korea is a longstanding ally. On the other hand, Trump is a clear isolationist who doesn’t seem to care about breaking off long-standing relationships if it suits his interests. He has also praised North Korean leadership, which can only embolden North Korea.

Is it possible that Trump ends up being more hawkish on all the bad actors than we expect? Possibly. But I think one reason Trump managed to get elected is because his sometimes inconsistent rhetoric makes it easy for people to engage in wishful thinking that he actually won’t follow through with whatever part of his proposals they don’t like. So until evidence to the contrary, I’m going to expect behavior that’s consistent with his prior rhetoric of praising dictators and sacrificing countries to the whims of their larger, aggressive neighbors.

Originally published at https://ukraineinsights.substack.com.