Fed’s Caution
The US Federal Reserve’s decision to lower its benchmark interest rate to a range of 4.25-4.50 per cent marks a turning point in its monetary policy.
The withdrawal of Joe Biden from the race for the American presidency has altered the dynamics of the forthcoming elections. Biden was considered weak and debilitated when compared to a pushy Donald Trump.
The withdrawal of Joe Biden from the race for the American presidency has altered the dynamics of the forthcoming elections. Biden was considered weak and debilitated when compared to a pushy Donald Trump. Bookies, who until recently had almost confirmed a Trump victory, now have doubts on who the next occupant of the White House would be. While a few continue to project a Trump victory, others believe his chances have reduced. It will no longer be a walkover for Trump.
These are still early days as Kamala Harris’s formal campaigning has yet to commence. She held her first rally in Milwaukee, Wisconsin, where Trump and J D Vance, his running mate, were nominated in a Republican rally. The attendance of over 3,000 was the largest at a rally in 2024. Harris is 18 years younger than Trump, a former public prosecutor and not one who would be intimidated by his claims in debates. Her campaign strategy would be simple, ‘prosecutor versus felon,’ seeking to continue highlighting Trump’s convictions. While Trump has picked his running mate in Vance, Harris has yet to decide. This will be a priority as some states would be voting soon. She already has support from the AfricanAmerican as also Indian-American communities.
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Trump’s sympathy votes, on his alleged assassination attempt, would lose their impact by the time elections come about in November. The bandage on his ear, which reminds voters of the attempt on his life, would no longer be there. The public has a short memory and hence would have forgotten the assassination attempt. The resignation of the Secret Service director, Kimberly Cheatle, over her failure in Trump’s security, would put the matter to rest. Trump would now shift focus from attacking Biden to degrading Harris. However, his major disadvantage is that most of his criminal cases involve women and if he makes derogatory comments against her and women in general, this could backfire.
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Caution has been forced on him. The question remains on who would gain an upper hand, the former prosecutor or the putative felon. For many countries, victory for Trump would be advantageous, while for others it could spell disaster. Harris is expected to toe Biden’s line on Ukraine, China and Iran but that is only an assessment as her specific views remain unknown. She has thus far adhered to whatever Biden said. Her policy on Israel-Gaza may witness a change as she has been fairly vocal on the subject. Israeli Premier Benjamin Netanyahu, while visiting the US met Trump, Biden and Kamala Harris.
Israel is aware that Trump is their main backer as he had, in his previous tenure, shifted the US embassy to Jerusalem from Tel Aviv, as also proposed a peace plan. As per Vox, Trump has been amongst the “most pro-Israel US Presidents.” On the contrary, Harris may be firmer with Israel. She is also a strong supporter of a two-state solution, which Israel is unwilling to accept. She told Netanyahu, “It is time for this war to end.” Ukraine’s President Zelenskky spoke to Trump after his nomination. Trump said, “I appreciate President Zelenskyy for reaching out.
I will bring peace to the world and end the war that has cost so many lives and devastated countless innocent families. Both sides will be able to come together and negotiate a deal that ends the violence and paves a path forward to prosperity.” Zelenskky would prefer Harris’ victory, as it would ensure continuity in policies. For NATO, Trump’s arrival could signal turmoil in an organization already facing challenges from the war in Ukraine. Trump is unlikely to continue funding the war and would push Zelenskky for talks. He had posted on his Truth Social Network as the NATO summit was underway in Washington that “If it weren’t for me as President, there probably would be no NATO by now,” adding most members “were delinquent, having paid very little.” He also called out European nations to “at least equalize” US spending on Ukraine.
For China, neither would be a good option. While Biden had maintained stability in ties, his strategy of countering China in the economic field has been effective. He successfully blocked China’s high-tech industry from gaining from the US. Harris is expected to toe the same line. Trump’s unpredictability and exerting pressure on Beijing may impact ties in the short term. His imposing additional tariffs on Chinese products, in his previous tenure, did pay off. In his current campaign, he promised to raise duties on Chinese imports to 60 per cent. In case he moves against Europe, China may gain. On Taiwan, it is unlikely that either side would permit China a free run, despite their views.
For both, any Chinese operation on Taiwan would be a red-line, though Trump is a known ‘isolationist.’ Vance, Trump’s choice for Vice President, stated in an interview that China and not the Ukraine war was the major threat to the US. Hence, for China, no matter who wins, it will be ‘lose-lose.’ Harris’s policy on India underwent a change post her assuming the chair of Vice President. In 2019, as a senator, following the abrogation of article 370 she had mentioned, “We have to remind the Kashmiris that they are not alone in the world.” As a Vice President, she has repeatedly raised her Indian roots.
At a state luncheon, hosted for PM Modi, during his US visit, she thanked him for his “role of leadership to help India emerge as a global power in the 21st century.” She is aware of common concerns on China, and of India being a US strategic partner. Trump’s unpredictability makes it difficult to assess his intentions. A lot would depend on his advisors. In 2019, he had termed India as the ‘tariff king’, and recently promised to impose counter tariffs. However, he would be aware of growing US-India ties and would continue to back them. Internally, Trump would proceed against those who pushed for his conviction and trial. His vindictiveness is well known. How this will play out is to be seen. The Presidential battle in the US is now hotting up. As time passes, the pendulum will continue shifting from one to the other. While the devils are known, the details are yet to emerge.
(The writer is a retired Major-General of the Indian Army.)
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