Trump Triumphant What does the Trump Presidency mark II mean for UK business?

President-elect Donald Trump secured 295 electoral college votes compared to Harris’ 226. But in what is giving us slight Brexit flashbacks, he won 51% of the total votes, equating to a victory of just under 5 million American citizens. He becomes just the second US President to serve two non-consecutive terms after Grover Cleveland in 1885 and 1893.

So the pendulum has swung back to a Republican Administration. Trump has always been seen as, of the two candidates, the most likely to cause the greatest international impact, and the reaction so far across the globe has slightly felt like a collective bracing against the oncoming ripples.

Much of his manifesto has many global leaders feeling quite concerned, particularly from economic and security angles.

The outlook for business is quite stuck on what Trump has referred to as the most beautiful word in the dictionary, the ‘tariff’. Unfortunately, tariffs aren’t quite so beautiful to the millions of companies around the world that rely on the US as their biggest export market. A blanket 10% tariff on all US imports, a figure that rises to 60% on Chinese imports, has the potential to send global trade patterns into shock. In fact, the IMF forecasts that the effect of these tariffs could wipe 0.8% from global economic output next year and 1.3% in 2026. Moreover, many economists are warning that these import levies could actually reignite global inflation, as higher business costs are passed on to customers and supply chains get disrupted due to the higher cost of sourcing materials.

This will particularly be felt among UK and European manufacturing, automotive and chemical industries, which represent the biggest portion of UK and EU exports to the US. But Trump is looking to lure internationally dominant industries, like the automotive one, into America; at one of his rallies last month he claimed ‘I want German car companies to become American car companies. I want them to build their plants here.’

And, with the EU reportedly already drawing up retaliatory tariff measures, coupled with the provocative nature of Trump’s approach to China, there are rumblings of a global trade war on the horizon. The IMF Deputy Manager made a speech earlier this year that warned serious decoupling and broad-scale use of tariffs could lead to a loss of up to 7% of global GDP.

The UK is supposedly not on Trump’s hit-list for increased tariffs, as he targets only those with which the US has a trade deficit.

But the question for Starmer will be how closely he follows the EU approach, or whether he prioritises closer alignment with the US. Similarly, the brewing of increased China-US tensions could pose quite a serious dilemma for the UK, which is pursuing a practical but careful relationship with China. Last month, Business and Trade Secretary Jonathon Reynolds said he was open to reviving UK-China trade talks, and that past engagement with the superpower has been too light. The government could therefore find itself in a position where it is caught in the middle of that special relationship with the US, its softer diplomatic approach to China, and restoring relations with the EU.

So what of the Special Relationship? Well, the Trump administration is the closest the UK has ever come to positive sentiment about a UK-US trade deal. But there have been some spanners in some works in recent months, namely when Trump accused Starmer of blatant interfering in international elections when he sent aides to campaign for Harris. The surfacing of comments made by Foreign Secretary David Lammy six years ago, when he described Trump in highly unflattering terms was also unhelpful.

Under Trump, the US will likely become much more inward looking, as the President-elect will aim to distance the US from all global conflicts and take the US out of multilateral bodies like the UN and NATO. He feels that the globalist view is unhelpful to the growth of the US. This is quite worrying in that a US that shrinks away from international support could present a threat to the defence capabilities of its allies, especially in light of growing geopolitical pressures across the globe.

In the same vein, Trump intends to withdraw the US from the Paris Climate Agreement, which was drafted in 2015 to strengthen the global response to climate change. He also intends to ‘drill, baby, drill’, upping investment in fossil fuels and cutting support for renewable energy. This is quite a serious setback to international efforts on the path to net zero and sustainable business.

The picture isn’t too pretty. Businesses have been reeling from the Chancellor’s tax-heavy Budget last week. The threat of extra tariffs to global businesses is therefore not welcome news. He might have promised to make America great again, but no doubt the whole world will feel the impact of Trump’s second term in the White House.