Bhubaneswar: When Donald Trump was the president of US in his first term of 2015-20, he was known then ‘Mr Unpredictable’ President.
But during the start of his new tenure Monday, that tag is no more there, President Trump has dropped enough hints during the poll campaign. And his first signing of as many as 30 executive orders and his inaugural speech reflects the poll vows Trump had taken.
TRUMP’S INAUGURAL SPEECH FINER POINTS
- Hard on illegal immigrants, a complete halt on illegal entry announced.
- Tough on criminals gangs, drug mafias from Mexico
- Declared National Emergency on the southern borders to flush out the criminal gang networks making America a safe haven.
- Announced reinstating of his 2019 “Remain in Mexico’ policy.
- Ordered deployment of troops to southern border.
- Declared drug cartels as foreign terrorist organsiations.
- Invoked Alien Enemies Act 1798.
- To curb inflation, announced production of more oil and gas and utilise the reserves
- Ended the Paris agreement – New Green Deal.
- Electric vehicle mandate revoked to give breathing space to its auto industries
- Announced setting up of External Revenue Service to levy tariff and taxes on foreign good and services.
- Promises to build strongest military in world.
- Renamed Gulf of Mexico as Gulf of America.
- Talked about how gifting Panama canal to Panama saw China now dominating it.
30 EXECUTIVE ORDERS SIGNED
As per the SBI Group Chief Economic Advisor, Soumya Kanti Ghosh's report, of the 30 Executive order signed, here the few that affect trade and economy.
- Directed federal agencies to combat consumer inflation
- Repealing of Biden-era regulations to ease burdens on oil and natural gas production, particularly in Alaska
- Impose 25% tariffs on Canada and Mexico starting Feb. 1,
- With plans for additional tariffs on Chinese imports (but not specified)
- Halted federal hiring, except for the military and unspecified areas of government – means put a cap on public sector hiring and jobs in USA.
- Proposed reclassifying certain federal employees as political appointees, making it easier to terminate them
- Order signed on the United States' exit from the World Health Organization – will be a big blow to WHO fund flow from USA.
- Suspended US foreign assistance for 90 days pending reviews
HOW IT IMPACTS INDIA?
As per SBI research report, the following to impact India
- Climate finance from US origin investors to slowdown thus impacting transition in Emerging Developing Economies like India
- We expect that US will impose tariffs on China.
- For India, past experience suggest that India has broadened its export market and exports towards value added and thus even if tariffs are imposed in a limited manner India might be impacted but not significantly in long run.
- We expect that US may negotiate favourable tax treatment for US business operating in India thus impacting the revenue of the Center.
- US may negotiate for fresh oil purchase contracts from US oil companies to support it local production.
- These purchases may have to be weighed carefully by India to avoid any disruptions and inflation management.
WILL TRUMP’S ‘DRILLY BABY DRILL’ ROCK CRUDE OIL MARKET?
In tandem with President Trumps new Rock –n-Roll song – Drill Baby Drill, a glance at the short term outlook of the US Energy department leads to the following conclusions.
- Predicts $6 drop in Brent crude prices
- The avg Brent crude prices in 2024 was $81/barrel
- In 2025, it is predicted to drop to $74/b
- In 2026, will drop further to $66/barrel
REASON: Global oil production will grow more than global oil demand. This will happen because, the report says: The unwinding of OPEC+ production cuts and strong growth in oil production outside of OPEC+ results in global oil production growing in our forecast. We expect global production of liquid fuels will increase by 1.8 million barrels per day (b/d) in 2025 and 1.5 million b/d in 2026.
The ‘Drill, Baby Drill’ will see US giving more focus on fossil fuels. The US President clearly stated that it will build up its oil strategic reserves to insulate the country from volatile oil prices now courtesy Russia-Ukraine war.
INDIA IMPACT
A lower crude oil prices will have a positive impact on India’s Current Account Deficit, and overall inflation. But SBI report has hoisted a 'WATCH OUT' signal for India.
