Santiago Center Panel Explores How a Second Trump Term Could Reshape the World

One week after Election Day in the United States, the Santiago Center hosted a webinar to examine the many ways in which Donald Trump’s re-election as U.S. President can shape the global landscape. The event — titled “The Aftermath of the U.S. Election: Global Geopolitical and Economic Impacts” — featured insights from Paula Estévez (SEAS’06), General Manager of the Chilean American Chamber of Commerce (AmCham), and Markus Jaeger, Adjunct Professor of International and Public Affairs at Columbia’s School of International and Public Affairs (SIPA), senior advisor at the Atlantic Council and advisor at the Windward Observer. The discussion was introduced by Antonio Campaña, Director of the Santiago Center, who welcomed the panelists and the nearly 100 guests who joined the conversation.

A Resilient U.S.-Chile Relationship

Paula Estévez opened the discussion by reflecting on the enduring relationship between Chile and the United States, pointing to milestones such as the 2023 celebration of the Bicentennial of diplomatic relations, the 20th anniversary of the U.S.-Chile Free Trade Agreement, and the recent entry into force of a Bilateral Tax Treaty which was almost unanimously approved by the U.S. Senate. “Our bilateral history demonstrates that the relationship between the United States and Chile is deep and strong, and at AmCham, we believe that it will continue to be so, throughout the changes in leadership on both sides,” she affirmed.

Estévez highlighted the U.S.’s role as the second-largest foreign investor in Chile, with energy, mining, and technology as key sectors. “This is not simply about being trading partners. I believe our countries are strategic allies, rooted in shared values like liberty, democracy, and human rights,” she said.

She also addressed the complex geopolitical situation that Donald Trump will have to face as the 47^th President of the United States and the inevitable global impact that his administration’s policies and decisions will have. In this line, she posed a critical question for smaller nations navigating today’s uncertainties: “How will an uncertain global environment affect a small country like Chile both economically and geopolitically? What would it mean to be part of a world with potentially weakened multilateral institutions, and what foreign policy should smaller countries consider?” she observed and added: “understanding this scenario is highly relevant for all of us, including the business community in both of our countries, so it’s really an honor to have Markus Jaeger to analyze,” giving him the pass.

“Personnel is Policy”

Markus Jaeger opened his analysis by stressing the importance of Trump’s cabinet appointments. “Of course, the President is a very powerful actor in the context of the U.S. government, but it's really cabinet officers and lower-ranking officials that ultimately implement many of the policies. So, this will be key to watch,” he remarked.

He noted that Trump’s second term coincided with a Republican sweep not only of the White House, but also of the Senate and the House of Representatives, which summed to the already Republican leaning Supreme Court, grants the party significant power to implement a broad reform agenda. While this majority could accelerate domestic policy changes, it would also face constraints. “Even the most powerful country in the world faces international constraints on what it can do. And of course, institutionally and domestically, the President and policymakers face constraints, be they legal, be they constitutional or be they just political,” he stressed.

Geopolitics: America First and Global Frictions

Jaeger described the “America First” philosophy as a cornerstone of Trump’s first administration, predicting a more unilateral, transactional and protectionist approach to global challenges.

Regarding Europe, he anticipated heightened friction with European allies, particularly over defense spending and efforts to settle the Ukraine war. “The Europeans are quite worried about the U.S. pushing Ukraine to negotiate a peace they don’t want with Russia,” Jaeger noted.

In the relationship with Asia, Jaeger, sees the Trump administration’s hawkish stance on China could dominate U.S. foreign policy, particularly because of the national security related appointments that have been made public in the last days of “China Hawks” (officials or advisors who take a tough or aggressive stance on China). While this could strain U.S. alliances in Asia, the strategic need to counter China’s influence in the region would likely sustain these relationships. “So even though there may be disagreements or tensions, the alliances with Asian countries will likely survive due to their strategic importance.”

In relation to Latin America, Jaeger observed that U.S. attention to Latin America will likely focus on migration with some potential for cooperation on trade and investment, but through a China focus, with added scrutiny of Chinese investments in critical sectors. “Regarding Chinese investments in Latin American ports, I think the next administration will take a much more aggressive stance,” he said, citing Marco Rubio’s appointment as Secretary of State as a signal of a tougher approach.

Jaeger also predicts that despite Trump’s rhetoric, U.S. alliances such as NATO will survive. “While there are some ‘America First’ Republicans in Congress, a fair number of traditional Republicans value alliances, which is why we can expect them to survive,” he explained.

Economic Outlook: A Mixed Bag

Jaeger highlighted the immediate strengthening of the U.S. dollar following the election and predicted expansionary fiscal policies driven by Republican tax cuts. “Most likely, they will make the 2017 tax cuts [made during the first Trump administration] permanent, adding to the budget deficit and potentially raising interest rates in the short term,” he said. Deregulation would also benefit sectors like fossil fuels and technology.

He also referred to the “wonkier” proposals floated during the campaign, such as replacing income taxes with tariffs or taxing capital inflows. “I don't think that's viable economically, and I don't think Congress is going to go for it,” Jaeger argued. He also touched on another idea, that of sanctioning countries that increasingly abandon the U.S. dollar or use it less. This is based on the notion that countries (such as the BRIC economies) are attempting to diversify their international currency relations by using the Chinese Renminbi, which could be a source of friction. “I don't think it's going to be a major thing necessarily in the next few years, but it could be in the longer term,” he noted.

Trade: The Big Thing to Watch

Trade policy emerged as the centerpiece of Jaeger’s analysis. “The big thing about the Trump administration and the thing to watch is trade,” he asserted.

He reviewed some of the measures imposed during Trump’s first presidency, such as forcing countries to renegotiate trade agreements, which although had a real impact in some countries, did not mean a complete breakdown of international trade. “The most impact was seen on the U.S.-China trade relationship. To this day the tariffs that were imposed on Chinese imports into the U.S. exist. Biden didn't even lower or repeal them when he came in.”

For Trump’s second term in office, Jaeger warned of aggressive measures against China, including 60% tariffs on Chinese imports and 10-20% tariffs on other trading partners, which would be quite dramatic, not only for China and potentially the U.S., but also for other developing countries. If China cannot export to the U.S., necessarily the exports will be diverted to Europe and other places and these countries will be forced to introduce tariffs. “You can see how this can spiral out of control pretty quickly,” he said, adding, “It’s not quite clear to me what is meant to be achieved. It's possible that in Trump's mind the idea is to reduce the trade deficit. Beyond the rhetoric we will see in the upcoming weeks and days, the important is who will be appointed as the U.S. Trade Representative, who will run policy on behalf of the administration,” he assured.

On trade with Europe, Jaeger noted some room for negotiation despite the protectionist rhetoric. “Yes, there’s an ‘America First’ rhetoric, but also there are still a lot of Republicans and Democrats who really don't want to have a global trade war,” he remarked.

National Security Policies and Export Controls

Jaeger discussed the growing focus on national security-driven economic policies, particularly restrictions targeting China, which have been a longstanding policy of both Democratic and Republican administrations and need to be understood in the context of the U.S.-China competition. “Because of the people being appointed to senior positions in the Government are so hawkish, I would expect a significant tightening of these policies, but they wouldn't be all that different from what they would have been had Harris won the election.” He also anticipated a tightening of investment and export controls, especially in sectors like technology, AI, nanotechnology and all other areas that are potentially technologically important and can give a country a significant advantage in the military space, but also to some extent in the economic and technological arenas.  This shift, described as “de-risking,” could pressure Latin American countries like Chile to align with U.S. policies.

Risks and Opportunities

Jaeger concluded by analyzing the broader financial implications of Trump’s potential policies. While fiscal stimulus and deregulation could boost U.S. growth in the short term, he warned of significant risks for emerging markets. He highlighted that China’s weak economic growth and Europe’s precarious position, exacerbated by the ongoing Russia-Ukraine conflict, could deteriorate further if the U.S. imposes significantly higher tariffs.

High U.S. interest rates and trade restrictions pose additional challenges for developing economies reliant on dollar-denominated debt. “Dollar debt becomes more expensive not only from a local currency perspective but also due to the difficulties of earning dollars through exports to service their debt,” Jaeger explained.

However, he clarified that these impacts likely wouldn’t have a massively distressing effect on countries like Chile or Mexico, despite some market repercussions. In turn, sub-Saharan Africa and other financially distressed regions could face heightened challenges, including reduced export opportunities and soaring financing costs.

In South America, Jaeger forecasted growing U.S. pressure to restrain Chinese investments in critical sectors like critical minerals. “I can't tell you how far the United States is going to go, but I think this will be an overriding concern for the administration,” he said. Both policymakers and private sector leaders in Latin America, he stressed, must carefully navigate the intensifying U.S.-China rivalry as the conflict will remain a driving theme not only for this administration but for future administrations, impacting third parties in Latin America and Europe. “It’s not going to go away and might even turn more hawkish over the next few years under the Trump administration,” he closed.

As Jaeger stated at the beginning of his presentation, “personnel is policy,” noting that the key appointments and next steps made by the new administration will shape the tone and trajectory of the coming years.

Watch the full webinar here.