The year of maximum Trump How will the new US President’s policies affect UK businesses?

Donald Trump’s second term got under way with a barrage of policy announcements. With announcements on trade tariffs expected soon, what might lie ahead for businesses in the UK and globally?

Trump 2.0 is here – and as expected, it’s clear that President Trump’s return to office marks a dramatic break with the recent past.

With a slew of executive orders ripping up Biden-era policies on energy, climate change, AI and more, this week has reshaped the business environment within the US. The effects will ripple around the world.

Even bigger waves will likely follow. The trade tariffs promised for ‘Day One’ did not materialise, but Trump has repeated his plan for 25% tariffs on Canada and Mexico, and indicated that a 10% tariff on Chinese imports will be in place by February. A 10% tariff on global imports also remains on the table.

Such far-reaching tariffs would have a dramatic impact. The IMF has calculated that 0.8% could be knocked off global growth in 2025, and 1.3% in 2026.

And tariffs are the last thing the UK needs, given our fragile economic position and dismal levels of business confidence. Ministers have argued that Britain will escape tariffs, as trade with the US is largely balanced. The chief secretary to the Treasury, Darren Jones, has gone so far as to argue that Trump’s return could be “an enormously positive thing with lots of opportunities.”

Yet put aside the diplomatic soundbites and it’s clear that the UK is in a tricky position as it steers between the world’s three great economic powers – the US, the EU and China. Move closer to Brussels or Beijing, and the UK could incur Washington’s wrath. But follow America’s line, and the UK may find itself unable to do deals with Europe or China.

That makes for a complex backdrop to the forthcoming UK Trade Strategy. The upshot – as the newly-published IoD input paper argues – is that the UK cannot rely on the revival of a multilateralist, free trade regime. Trade policy needs to be flexible and agile, with greater emphasis on bilateral deals in other parts of the world. Business will be watching closely when the strategy emerges this spring.

As the IoD’s Annual Policy Outlook suggested, 2025 is set to be the year of maximum Trump. The changes unleashed in the past few days bear out that prediction. The UK, and the rest of the world, will have to find ways to live with the consequences.

About the author

Dr. Roger Barker

Dr. Roger Barker

Director of Policy and Corporate Governance, IoD

Dr. Roger Barker is Director of Policy and Governance at the Institute of Directors, and a member of the Management Board. Dr. Barker is the author of numerous books and articles on corporate governance and board effectiveness, including the recent volume: ‘The Law and Governance of Decentralised Business Models: Between Hierarchies and Markets’ (Routledge, 2020). He is a former member of the European Economic and Social Committee and the founder of a successful corporate governance advisory company. A former investment banker, Dr. Barker spent almost 15 years in a variety of equity research and senior management roles at UBS and Bank Vontobel, both in the UK and Switzerland. He has a doctorate from Oxford University and taught politics at Merton College, Oxford (2005-2008).

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