What can we expect from a Trump presidency?6 Nov 2024 17:59
And what might those proposals look like?
For a start, rising tariffs on foreign trade and lower taxes for US companies. The US is Britain's largest export market, with exports reaching a value of £188bn in the year to October. Meanwhile, a rising value of the US dollar could also add foreign exchange costs to the nation’s importers.
Trump has expressed a desire for a tighter relationship with Britain, but proposals include opening up the UK healthcare market to US companies and relaxing animal welfare regulation - both of which are unlikely to go down well with the new Labour government.
Deregulation is also front of mind for the incoming president and the voice in his ear which sounds an awful lot like Elon Musk. Large cap tech companies, which already benefit from a hugely outdated regulatory environment, could keep striding upwards. Although this does come with the caveat of harder trading with China. Most of the US tech companies rely on some degree of back and forth between Chinese companies or the nation’s consumers. Whether deregulation will offset concerns about Eastern trading will be interesting to see.
And then there is climate change, which Trump is not a big believer in. He wants to take the US out of the Paris Agreement and undo Joe Biden’s climate policies, including reducing emissions and the target of 67% electric vehicles by 2032. He plans to massively increase domestic oil and gas production. But commentators reacting to the news this morning have said he’s unlikely to repeal the inflation reduction act (part of which is aimed at increasing the production of domestically produced clean energy) because the bulk of the spending under this policy happens in states controlled by republicans. Meanwhile, Tesla’s Frankfurt-listed shares don’t seem to have been hurt by news of a decrease in EV subsidiaries. They're up 14% in early trading - no doubt supported by Elon Musk’s early hours tweet “game, set and match”.
Finally, there’s defence. Trump has vowed to pull the US out of NATO unless other members increase their defence spending. For the UK, which already contributes 2% of its GDP to defence (which is due to rise to 2.5%), there likely won’t be undue pressure to amp up the defence budget. But geopolitical tensions are unlikely to be eased by the changes afoot in the US, so perhaps defence remains an attractive sector for those looking to profit from a Trump presidency.
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