An economy that is the main export market for the world's biggest economies and, crucially, an economy that produces the world's reserve currency, the mighty US dollar.

So far, the dollar has jumped, while currencies of major exporters like the Mexican peso and Japanese yen have slumped.

On top of that, Trump has literally said that Under my leadership, we're going to take other countries' jobs.

Did you ever hear that expression before?

So does this mean that Trump's plans will enrich the US and make the rest of us poorer?

That is the question we'll be going over for each of these two key economic policies, starting with the one Donald Trump has been obsessing over since the 1980s.

Trade policy, where while Trump used to obsess over Japan, the United States has now been overtaken by China as the world's most important producer.

But crucially, as you can see here, when it comes to being the most important source of demand, the US is still the world's most important importer.

Indeed, as you can see here in this graph from the IMF, almost all of the surpluses from systemic exporter countries like China, Japan, Gulf states and Germany are absorbed by demand from the United States, which is represented by the dark orange bars.

Therefore, continued demand from the United States is crucial to the global economy, and especially for systemic exporters like China, Japan and Germany.

Ever since Trump first came to power in 2016, the US has been trying to desperately decrease its imports and increase its exports.

Trump did this by imposing tariffs on the world, and especially China.

On the other hand, Biden preferred to dole out subsidies to US-based manufacturers while keeping in place and even increasing some Trump tariffs against China.

So what can the world expect from Trump now?

First of all, Trump is likely to cut Biden's signature subsidies, especially to green energy producers.

The world's exporters will be happy about that, but they will hate the fact that tariffs are now back on the menu.

Tariffs against China, but crucially also against any country that displeases Mr Trump.

And which country displeases Trump the most?

Well, it's mostly countries that run a big trade deficit with the US.

But notably, countries can get in Trump's good graces if they buy a lot of military equipment from the US or if they do a lot of NATO spending relieving the US elsewhere.

This is why trade surplus countries like Saudi Arabia and Israel managed to stay in Trump's good graces while Mexico, Germany and Japan, and of course China, were consistently under threat of increased tariffs last time around.

Surprisingly though, even these exporters could still end up exporting more to the United States under Trump, not less.

You see, while tariffs will likely hurt exports to the US, last time around Trump turned out to be a big spender, slashing taxes for most Americans and giving them stimulus tax.

This made Americans richer, allowing them to spend a lot of that on more imports.

Therefore, despite his rhetoric, the trade deficit doubled under Trump the last time.

So will Trump again be a paper tiger, threatening with tariffs while implementing tax cuts that increase US demand for global goods?

I think that now for a large part depends on Trump's billionaire friend, Elon Musk, who Trump promised will head the newly formed Department of Government Efficiency.

This agency will be charged with sweeping spending cuts.

Spending cuts that could be so drastic that they will plunge the US into recession.

At least, that is what Musk has hinted at on X.

If the US ends up in a recession, its citizens will of course have far fewer dollars to spend on imports.

In that case, Trump 2.0 could actually be a disaster for the global economy.

So will Trump again be a big spender or will Trump and his new buddy Elon crash global markets?

So far, financial markets are betting that Elon's spending cut plans will be more like his failed Vegas tunnel than his SpaceX rockets, as the mighty US dollar shot up right after it became clear that Trump won the election.

This likely happened because currency traders were betting that Trump will spend more, causing inflation and this then will cause the Federal Reserve to raise interest rates to counter that inflation.

Then higher interest rates will attract more foreign capital to US markets, causing the dollar to rise.

This is the second key effect Trump's spending will have on the global economy, which relies heavily on borrowing and lending in US dollars.

So while increased spending on the one hand may help the global economy, this will partially be offset by the fact that the Federal Reserve will have to raise rates, which will make global dollar borrowing and spending more costly.

This will especially hurt global dollar borrowers like Egypt, Turkey and Argentina, even though it may help global dollar lenders like China, Japan and Germany.

On the other hand, if the Elon scenario happens and global trade crashes, we can expect the Federal Reserve to partially offset this by lowering interest rates instead.

So in conclusion, Trump having won means that the global economy faces two fairly extreme scenarios.

The first scenario is the Trump 1.0 boom scenario with higher US imports and higher interest rates, benefiting exporters despite the threat of tariffs.

The second scenario is the Elon Musk austerity scenario, which will lead to lower trade and lower interest rates, ruining exporters while potentially providing some relief for global borrowers.

Right now, financial markets believe the Trump 1.0 boom scenario with higher US spending, inflation and interest rates is the most likely.

I personally would not bet money on it though, as Millet in Argentina has shown that radical right-wing spending cuts do sometimes actually materialize, leading to a recession.

One thing is certain though, and that is that this type of radical uncertainty is bad news for the long-term attractiveness of the US dollar as a global reserve currency and for global trade in general.

That being said, as this graph has shown, global trade has been unbalanced for decades now.

Key Trump economic advisor Scott Besant recently said that the US, under Trump, does actually not want to abandon the global economic order, but rather reform it to make it less imbalanced.

Indeed, many well-respected economists have argued that the current dollar-based economic order is ultimately unsustainable and leads to increased inequality within both major exporters and major importers.

At least, that was a major part of Mr. Besant's argument that he published in The Economist, the sponsor of today's video.

If you want to get into more depth about what the Trump administration will do on a global scale, I highly recommend to check out the full article in The Economist.

Then I suggest you follow up with this article, published by Trump aide Nadia Shadlow, about how Europe can best work with Trump.

Finally, I'd recommend this article about the tail risk of the new Trump administration.

Such extensive coverage of arguments from both sides is exactly why I'm excited to share that money and macro viewers can now get 20% off an annual subscription to The Economist, which gives you full access to their daily in-depth global reporting for an entire year.

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