In a year defined by democracy, when more than half the world’s population have been eligible to take part in elections, one poll looms particularly large. Regardless of the result, the US presidential election will have major implications for the direction of global trade.
Republican candidate Donald Trump has pledged to implement a fresh flat tariff on imported goods of 20%, rising to 60% for those from China. This could reshape global trade and, if projections from the IMF are to be believed, wipe out the equivalent of the French and German economies combined from global GDP. Trump has argued the measures would reshore manufacturing on US soil.
Democratic candidate Kamala Harris has been less overtly protectionist, but is likely to maintain the larger part of the tariff regime in place under current president Joe Biden. And while she may have declared “I’m not a protectionist Democrat” at a 2019 presidential debate, she has also said that “we need to export American products, not American jobs”.
Whoever wins, major issues for global trade like the suspension of the World Trade Organization (WTO) dispute mechanism could remain unresolved. Since 2017, the refusal of the US to appoint new judges to the WTO’s appellate body has prevented countries from appealing initial judgements. With this in mind, it’s clear that we need to move to a system of trusted trade to address the ongoing weaponsiation and disruption of global supply chains.
The election comes at a time of rising demand for British food and drink brands among US consumers, according to new research that suggested UK products were seen as traditional, healthy and high quality. Could a fresh hike in tariffs turn this huge export market stale?
Other recent signs from the US have also been positive for UK exporters. A raft of Memoranda of Understanding (MoUs) have been signed between the UK government and US states in recent years, including with Florida and Washington. Indeed, I was privileged to discuss the importance of strong bilateral relations with a trade delegation from Jacksonville last month.
The election of a new Labour government hasn’t stopped a British tilt towards trade with the US, with reports that foreign secretary David Lammy is seeking ‘carve-outs’ for subsidies under the Biden administration’s Inflation Reduction Act.
Lammy also met with representatives from the Trump campaign earlier this year in signs that the current government may also seek further MoUs with a Republican administration. While Trump has previously suggested that UK-US trade “could be four to five times higher” than at present, he has been reluctant to commit over concerns about the post-EU exit deal between the UK and EU.
Trump and Harris’ differences on trade with the UK and the rest of the world represent divergent visions of the US’ place in the global economy. Where Harris represents continuity with the Biden administration’s gentler approach to reshoring production, Trump’s plans could transform global trade. We will only know which vision has prevailed when polls close next week, but it will pay for UK traders to keep a keen eye on what happens next.
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