Following a sweeping election victory, Donald Trump will become US President once again on January 20th but what does this election mean for UK businesses? In this article, former BBC News Political Correspondent Robin Brant analyses the impact a Trump administration could have on businesses in the UK:
Trump 2.0 and his mandate for change:
Donald Trump has gained what he has described as an ‘unprecedented and powerful mandate’ having won both the popular vote and the electoral college resoundingly. Unlike in 2016, this election victory has also not been hampered by allegations of Russian interference giving Trump a clean slate to push through his ‘America-first’ agenda.
Staying with 2016 and Trump’s first term as President, one thing we know for certain is that the President-elect sticks to his promises. When he takes office on January 20th it’s safe to assume there will be no honeymoon period and the first steps towards enacting his mandate will be taken in earnest.
What do we know so far?
One of the Trump campaign’s key election policies was universal tariffs on goods imports to the US. Trump has threatened 60% tariffs on Chinese exports and a 10% tariff on goods from all other countries including the UK. More than 15% of UK exports are to the US so this could have a significant impact on UK businesses that don’t have production facilities stateside.
Chancellor Rachel Reeves has been keen to allay concerns, stating that it was ‘too early’ to speculate about the economic impact of these tariffs. However, The Guardian recently shared data from The National Institute of Economic and Social Research (NIESR) indicating that these tariffs could potentially halve UK growth.
Which sectors in the UK are going to be impacted?
Any UK based company with significant goods trading export interests in the US is likely to be hit hard by these tariffs. This will clearly include multinational corporations but will also have an impact on smaller firms with substantial export exposures to the US.
Sectors that could face significant headwinds as a result of these changes include aerospace, alcohol, automotive, chemicals, fashion and the pharmaceuticals industry. UK businesses hit by tariffs will need to either absorb these heightened costs themselves or pass the rises on to their customers.
President-elect Trump has also signalled his support for the burgeoning cryptocurrency industry. Following his election Bitcoin has hit record highs as investors anticipate a more relaxed regulatory environment. UK crypto firms have a lot to gain in the US market and the UK government may well look to follow suit and create a more accommodating landscape.
Will Trump follow through with tariffs?
While the threats of goods tariffs are undoubtedly alarming for UK businesses, it is important to look back at Trump’s first term in office. While Trump threatened (and imposed) widespread goods tariffs, he also allowed companies to apply for special exemptions. The New York Times reported that the Office of the United States Trade Representative handled more than 50,000 such requests.
The new US treasury secretary Scott Bessent described these threats as a negotiating strategy, suggesting that there is room for manoeuvre once Trump takes office. Former Missouri Senator Roy Blunt also recently suggested that the UK was in the ‘best place’ to dodge any potential tariffs.
How can businesses engage with the Trump administration?
Much unlike the outgoing Democratic administration, the early signs coming out of Trump’s campaign indicate a focus on a much smaller government as well as a heightened reliance on a close circle of personal relationships.
In addition to the headline-grabbing supporting actors Elon Musk and J.D. Vance, this circle is mostly comprised of those who have remained loyal to the President-Elect since 2016. Key figures include Senator Rick Scott and Texas Governor Greg Abbott.
For businesses looking to engage with the Trump administration, high-level relationships will be key to understanding the policy making process as well as communicating positions to senior administration figures. Underlying tensions between the Labour government and Trump’s team are already coming to the fore so businesses should focus on what they can do proactively, rather than relying on purely governmental channels.
To discuss how we could help advise your organisation on how to navigate the new US government get in touch today.