Let’s start with a question: for which 2024 candidate is this the opening statement of the manifesto?
“For decades, our politicians sold our jobs and livelihoods to the highest bidders with unfair trade deals and a blind faith in the siren song of globalism.”
George Galloway? Jeremy Corbyn? Jean-Luc Mélenchon, of the far-left France Unbowed? All wrong. This is the opening paragraph of the manifesto adopted by Donald Trump and his Republican Party at last week’s National Convention.
‘America First – A Return to Common Sense’ demands the attention of every UK food and drink business. This column is about why that is the case, and how you should prepare.
The policy commitments are scary enough. The number one target is China. The US will start a trade war with the People’s Republic, banning imports and blocking Chinese investment in American business. As US-China transactions account for well over a third of global GDP, the conflict is bound to escalate and engulf others. The EU would be caught in the crossfire. So, too, would the UK. Almost certainly each would have to pick a side, with significant consequences for retaliation on food and drink exports and imports from the other combatant. The disruption to supply chains and global trade will be seismic.
But it won’t only be China. Republicans will impose added tariffs on imports from America’s allies as well as foes. That could very well include scotch, salmon and cheese from the UK, and who knows what from the EU. It’s difficult to imagine either would avoid taking counteraction, if only because public opinion would demand it.
The trade war that would quickly follow would mean higher prices and interest rates around the world as inflation spikes. While the US – potentially a relatively hermetically sealed economy if Trump has his way – would be somewhat protected, the rest of the world could be headed in a handcart direction. Or it would have to pivot towards other economies – including China, India and the rest of Asia.
But there’s a kicker here. US companies with a major presence in the EU, Asia and the UK, and those global companies with a big presence in the US, may have to make a choice: in which sphere they wish to continue to be highly active in order to preserve their profitability.
I know this sounds fanciful. But read the Republican programme and it’s obvious the true believers (who may or may not include Trump and his running mate JD Vance) are seeking to force that choice. ‘America First’ is now a creed, not an aspiration.
Of course the multinational giants of the US consumer industry will seek to ameliorate, delay and compromise. For decades they have succeeded when challengers have come before them. But this time is different. An escape route may not be so available. They may at least have to look at ways of legally separating parts of their businesses to ensure long-term success: imaginative solutions previously deployed to find a way around Russian sanctions might now be required for China, Asia and then Europe.
So what should UK businesses do? First, they should stop and think. The most important way to deal with risk is to ask: what might happen, and what would we do if it did? Secondly, they should assess the scope of their exposure – and that of their supply chains – to protectionist action in whatever territory it might emerge. My guess is only one in 10 business have ever done this. They should do it now and do it fast. A Republican win could be less than four months away. Thirdly, they should look at their business plan and ask: how and where would we look for new markets?
This is all rather apocalyptic, but so was Covid. So was Ukraine. This might not happen: Kamala Harris might win. But the old certainties have gone, and only the stupid are not at least partially prepared for the worst.
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