If Trump returns with the momentum of sweeping the seven swing states, and if he truly intends to fulfill his promises, such as reducing taxes domestically, increasing taxes externally, and cracking down on immigration, then the United States and major countries around the world may all face the issue of inflation soaring again.

At present, the Republican Party is highly likely to completely control the majority of seats in the U.S. Senate and House of Representatives, enabling Trump to smoothly advance his economic agenda during the first two years of his term.

Trump has previously promised that if he takes office in the White House, his core policies will focus on economic growth and bringing back companies to the United States. Trump vigorously defends high tariffs and believes that this is a way to stimulate economic growth.

In the financial markets, the U.S. stock market opened significantly higher on Wednesday, and the dollar is also rising against major currencies. Some analysts point out that this is because traders believe that the domestic inflation rate in the United States will rise, and the extent of Fed rate cuts may be limited.

Matthew Ryan, Market Strategy Director at the financial technology company Ebury, stated that investors believe Trump's plan to raise tariffs will harm the global economy, thereby increasing the demand for the dollar as it is seen as a safe haven.

Susannah Streeter, Fund and Market Manager at investment platform Hargreaves Lansdown, believes that the strength of the dollar reflects the market's expectations of the policies Trump may implement, including tax cuts, tariff increases, and immigration restrictions, all of which are factors that could trigger inflation, possibly meaning higher U.S. benchmark interest rates in the coming years.

Streeter wrote in the report: 'Investors are preparing to deal with higher tariffs.... This will push up the prices of imported goods for American consumers.' She added that Trump has vowed to do everything possible to deport illegal immigrants, which could also have an impact on the economy, potentially raising companies' wage bills and service prices.

deVere Group CEO Nigel Green said in a report that part of the reason Trump won the election is due to Americans' dissatisfaction with inflation, but he may not be able to lower prices as voters expect. Trump's promise to impose tariffs on imported commodities may have the opposite effect, as importers will pass on the additional costs to consumers. "Although the goal is to protect American businesses, the reality is that these tariffs may exacerbate the inflation pressure Trump promised to alleviate."

The impact goes beyond the borders of the usa.

During the campaign, Trump proposed imposing 10-20% tariffs on all imported commodities, a significant increase from the current average tariff of 2%. He stated at a campaign rally in Raleigh, North Carolina on Monday that unless the Mexican government stops illegal immigration, once elected, he will impose a 25% tariff on all products imported from Mexico, with rates potentially escalating to 100%!

Tariffs are taxes imposed on imported commodities, harming consumers and enterprises that rely on intermediate products needed for importing raw materials and manufacturing finished products. But Trump believes that tariffs will not be passed on to consumers, and that tariffs protect American businesses, attracting many enterprises to enter the usa.

Nomura Securities analysts wrote in a report on Wednesday: "We now expect the Federal Reserve to only cut interest rates once in 2025, and monetary policy will remain unchanged until the inflation impact brought by tariffs fades away."

Investec's Chief Economist, Philip Shaw, believes that the pain caused by Trump's tariffs will extend far beyond the borders of the usa. "If America's trading partners retaliate against American goods, global inflation will rise significantly, and the subsequent impact on world trade will have a negative effect on economic growth."

Moreover, a stronger dollar may also bring upward pressure on global inflation. With the stronger dollar, countries pricing imported commodities in dollars may see price increases, which either need to be absorbed by businesses or passed on to consumers.

Market research company BMI under Fitch Solutions believes that Mexico and Canada may be at the forefront on the issue of tariffs, as their economies heavily rely on exports to the usa.

Editor/rice