What Donald Trump’s election win means for global trade

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us election politics america

In a year defined by democracy, when more than half the world’s population have been eligible to take part in elections, one poll has loomed particularly large. The US presidential election, and the success of Republican candidate Donald Trump, will have major implications for the direction of global trade.

At time of writing, Trump has clinched the presidency by winning a raft of swing states. His Republican Party has also won a majority in the Senate and could yet claim the House of Representatives. These victories give the upcoming administration the unconstrained ability to implement Trump’s policy objectives, including the shift from income tax to tariffs as a key revenue generator. It also means that the administration can set about weaponising trade in pursuit of its stated America first principles.

During the election, Trump pledged to implement a fresh flat tariff on imported goods of 20%, rising to 60% for those from China and 100% for nations that seek to move away from using the dollar as the reserve currency. This policy will have very real impact on Brazil, Hong Kong and Thailand, whose central banks have, this week, announced a collaboration to create a new digital trade currency.

The announcements made during the election campaign will undoubtedly 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 will reshore manufacturing on US soil.

Major issues for global trade, like the suspension of the World Trade Organization dispute mechanism, will more than likely 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.

The rules-based order has been vital to trade’s success in recent decades, enabling it to lift billions out of poverty while securing relative peace. It’s clear that this order now needs to be reformed on the principles of trusted trade. The ongoing reshaping of hugely fragile supply chains is again set to be disrupted by immense, tectonic geopolitical forces.

This 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 from Trump turn this huge export market stale?

Yet other recent signs from the US have also been positive for UK exporters. Eight Memoranda of Understanding (MoUs) have been signed between the UK government and US states in recent years, including with Florida – a Republican state – 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 in July didn’t stop a British tilt towards trade with the US. There have been reports that foreign secretary David Lammy is already seeking ‘carve-outs’ for subsidies under the Biden administration’s Inflation Reduction Act. As well as these efforts, Lammy also met with representatives from the Trump campaign earlier this year, in signs that the current government may 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 to an outright trade agreement over concerns about the post-EU exit deal between the UK and EU.

Trump’s vision for trade will be drastically different to the one Kamala Harris proposed during the election. Where Harris sought continuity with the Biden administration’s gentler approach to reshoring production, Trump’s plans will put trade and trade policy on the frontline of global politics. Now that Trump has prevailed, there’s a short time for the UK to deploy its political influence, and turbo-boost commercial diplomacy, uniting business leaders and our exceptional diplomatic team to actively engage with Trump’s.