Legendary investor Jim Rogers warns Trump's 'America First' policy could lead to inflation

Investor Jim Rogers, renowned for his expertise and strategic insights, has raised concerns over US President-elect Donald Trump ’s ‘America First’ policy. Rogers, known for his contrarian approach to investing, co-founded the Quantum Fund with George Soros and authored several books on global investing. He’s also a proponent of investing in commodities and has a track record of predicting major economic trends, making his views highly regarded in the financial community. His perspective on the US economy and global markets often reflects his belief in the value of diversification and cautious investment, particularly in uncertain economic climates.

Rogers advises a cautious stance on stock markets, particularly in the US, recommending safe-haven assets like gold and silver, traditionally used to hedge against inflation. He indicated that Trump’s policy is likely to hurt the global economy, not just the US, adding that trade wars could exacerbate worldwide inflation and potentially lead to another recession . Rogers also expressed concerns that Trump’s high-tariff policies, part of his "Make America Great Again" campaign, might backfire domestically. Economists warn these tariffs could result in trade wars, disrupt global supply chains, and spark inflation.

Commenting on trade restrictions, Rogers stated that Trump’s approach would negatively impact the US and the broader world economy. He highlighted that the US is already dealing with inflation issues, which central banks have yet to resolve. He pointed out that high tariffs might push the central bank to maintain elevated interest rates, worsening inflation. Rogers believes that the high levels of US debt would be a hurdle, predicting that any missteps in Trump’s approach could further destabilise the economy and lead to a significant recession.

Rogers has recommended that the US focus on reducing spending and debt instead of restricting trade with countries such as China and India, suggesting that trade limitations will only intensify economic troubles. Some analysts foresee a recession hitting the US as early as 2025, a development that could destabilise US stock markets and make recovery a difficult journey after years of growth. Rogers also voiced scepticism about Trump’s proposed corporate tax cuts aimed at boosting domestic manufacturing, which, he argued, could aggravate the fiscal deficit.

Reflecting on times of economic turmoil, Rogers noted that investors tend to turn to safe assets, which is why he favours commodities like gold over the dollar. During recessions, he explained, gold typically performs well, acting as a reliable store of value. Rogers added that while the dollar’s stability remains in question, commodities are often a more resilient choice for investors.

On a more optimistic note, Rogers signalled his intention to reinvest in India, highlighting the country’s positive shift in economic attitude, where prosperity and success are increasingly valued. He noted that he had previously exited the Indian market too soon but sees strong potential for future growth. However, with Trump’s renewed influence, Indian exporters may encounter heightened tariffs on critical exports like automobiles, textiles, and pharmaceuticals. Analysts predict that Trump’s policies could lead to more challenging trade negotiations and additional trade barriers, along with stricter H-1B visa regulations, which would likely increase costs for Indian IT companies.