The Trump Risk Index, a comprehensive report by the Economist Intelligence Unit (EIU), evaluates the potential global impact of a second Trump presidency.
It measures the exposure of the US’s 70 largest trading partners to significant policy changes across three key areas: trade, immigration, and security.
The report examines how a more protectionist US trade policy, involving potential tariffs, trade barriers, and renegotiations of trade agreements, could affect global trade dynamics.
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Additionally, it considers the impact of stricter US immigration and border policies on countries reliant on the US for remittances, labour markets, and bilateral relations.
“We expect that a Trump administration would increase funding for border-wall protection and other deterrence strategies. There would be an increased focus on migrant expulsions and some form of additional restrictions on legal pathways for international labour migration and study.” the report highlighted.
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Finally, the report assesses how efforts to rebalance US security and defense policies might influence global security dynamics, including changes in military alliances, defense spending, and international cooperation on security issues.
The overall risk score reflects each country’s vulnerability to these anticipated policy changes, providing a detailed overview of the potential global repercussions of another Trump administration.
“Besides running large bilateral trade surpluses with the US—a major concern for Mr Trump—each is also reliant on US security provision and spends a relatively low share of GDP on defence.”
According to EIU, here are the 10 most exposed countries in the Trump Risk Index (TRI)
1. Mexico: Overall Exposure Score – 71.4
Mexico tops the TRI with an overall exposure score of 71.4. This high vulnerability is primarily due to its significant trade ties with the US. Any move towards a more protectionist trade policy, such as the imposition of tariffs or renegotiation of trade agreements like NAFTA, could severely impact Mexico’s economy.
Additionally, stricter immigration policies could disrupt the flow of remittances, which are a crucial source of income for many Mexican families. The security dimension also plays a role, given the close military cooperation between the two countries and the implications of any shifts in US defense policies.
2. Costa Rica: Overall Exposure Score – 59.1
Costa Rica’s exposure is heavily influenced by its economic dependence on the US market. The potential for increased trade barriers poses a significant risk to its export-driven economy.
Tighter immigration policies could also affect the labour market, particularly in sectors reliant on migrant workers. The security aspect is less pronounced but still relevant, as changes in US defense spending and military alliances might impact regional stability.
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3. Germany: Overall Exposure Score – 52.9
Germany’s exposure stems mainly from trade and security considerations. As a leading exporter, Germany would be adversely affected by any protectionist measures implemented by the Trump administration.
Moreover, Germany’s role in NATO and reliance on US defense support make it sensitive to shifts in US security policies. Changes in US immigration policy are less impactful for Germany compared to trade and security.
4. Dominican Republic: Overall Exposure Score – 52.6
The Dominican Republic’s vulnerability is linked to its economic and social ties with the US. Trade barriers could disrupt exports, while stricter immigration policies might reduce remittances that are vital to the local economy.
Security concerns are also relevant, given the potential for changes in US defense strategies affecting regional security dynamics.
5. Panama: Overall Exposure Score – 50.8
Panama’s strategic position as a global trade hub makes it particularly sensitive to changes in US trade policy. Increased tariffs and trade barriers could have a ripple effect on Panama’s economy.
The country also has significant ties with the US in terms of immigration and security, with potential implications for remittances and regional stability.
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6. China: Overall Exposure Score – 50.4
China’s exposure in the TRI is primarily driven by trade considerations. A protectionist US trade policy could escalate trade tensions and lead to economic disruptions.
While immigration policies are less impactful for China, security concerns are significant. Changes in US defense spending and military alliances could influence the broader geopolitical landscape, affecting China’s strategic interests.
7. Japan: Overall Exposure Score – 49.2
Japan’s vulnerability arises from its deep economic ties with the US and its strategic security alliance. Trade barriers could hinder Japan’s export-driven economy, while shifts in US defense policies could affect Japan’s security environment.
Although immigration issues are less critical for Japan, the overall exposure remains substantial due to trade and security factors.
8. El Salvador: Overall Exposure Score – 48.1
El Salvador’s exposure is largely related to remittances and trade. Stricter US immigration policies could reduce the flow of remittances, which are a lifeline for many Salvadoran families.
Trade barriers could also impact the economy, although the security dimension is less pronounced compared to other countries on this list.
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9. Vietnam: Overall Exposure Score – 47.1
Vietnam’s exposure is primarily trade-related. As a key exporter to the US, any protectionist measures could disrupt its economy.
While immigration and security concerns are less significant for Vietnam, the potential impact on trade is enough to place it among the top ten most exposed countries in the TRI.
10. Honduras: Overall Exposure Score – 45.8
Honduras’ vulnerability is linked to remittances and trade. Tighter US immigration policies could significantly reduce remittance flows, while increased trade barriers could affect the economy.
Security concerns are also relevant, given the potential for changes in US defense strategies affecting regional stability.
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