Nearly two months after Donald Trump’s surprise win over Hillary Clinton, the reality of the soon-to-be President Trump has pretty much sunk in.
The US Electoral College confirmed his victory just before Christmas, and, on 20 January, the businessman and former television personality will be inaugurated as the 45th President, succeeding Barack Obama.
While some commentators had expected Trump to temper his actions and rhetoric post-victory, the President Elect’s government appointments – and no sign of let-up in his famously provocative tweets – suggest otherwise.
Back in 2008, Obama may have been elected on a platform of ‘Change’, but it’s Trump who really seems set to shake things up across the pond. The difference this time is that we have limited insight into what a Trump presidency will look like, given that he has never before held any elected office – usually a handy indicator of an incoming president’s priorities and style.
Still, whatever impact Trump has in the US and on the world stage, we can be pretty certain that there will be implications for the UK – and for UK business.
For example, will we see a recalibration of the so-called ‘special relationship’, with potential impacts on post-Brexit trade deals? And will the presence of a businessman in the White House, rather than a career politician, show up Trump’s limitations or bring some refreshing business nous to the often illogical and slow-moving world of politics?
No-one really knows the answers yet, and, as ever, experts often disagree on what is likely to happen. So, drawing from (and linking to) a diverse selection of sources from the UK and beyond, let’s take a look at some of the key issues and policy areas that are of interest so far.
Brexit and trade
An obvious difference between Trump and his predecessor is that while Obama advocated a Remain vote – and suggested that a post-Brexit UK would be at the “back of the queue” for any trade deal – Trump has made much more positive noises about US-UK trade ties once Britain leaves the European Union. This does matter, as the US is the UK’s second-biggest export market – after the EU.
Last May, for example, before the Brexit vote, Trump argued that “Britain's been a great ally. With me, they'll always be treated fantastically” – though Theresa May could be forgiven for thinking otherwise as she waited, 11th in line, for Trump to call her after his win.
However, even if a UK trade deal is, as reported, a “top priority” for the incoming president, there are fears that an agreement could “take years” – and with the new administration pursuing a protectionist, “America first” approach, Britain will have to negotiate hard to get a good deal. On the other hand, if Trump’s US focus succeeds in driving domestic economic growth, that, and the strong dollar, could present opportunities to UK exporters.
More widely, though, some experts have argued that Trump’s plan to “tear up” global trade agreements, such as the North American Free Trade Agreement (Nafta) that he deemed the “worst deal ever”, could impact negatively on economic growth at the global level.
So, on the trade front, it may be that, on balance, UK businesses ultimately benefit from a Trump presidency – but like any trade deal with the EU, don’t necessarily expect it to happen overnight, despite Nigel Farage’s “very warm vibes”.
Markets, interest rates and the pound
Markets, and business, dislike uncertainty, and there’s no doubt that Trump’s presidency offers plenty of that.
While global markets quickly recovered from the initial shock, some experts argue that a sustained period of Trump-induced jitters could see the Bank of England move to cut interest rates further, reducing the cost of borrowing for British consumers and businesses, and stimulating economic growth. For now, though, the apparent resilience of the UK economy – a point that Brexiteers are understandably keen to highlight – makes such a cut unlikely.
In the US, the Federal Reserve has increased interest rates once since Trump’s victory, with an expectation that Trump-driven economic growth – propelled by increased spending, tax cuts and deregulation – will necessitate further increases in 2017. The impacts of US interest rate rises on the UK are hard to pin down – as this BBC News piece explains – but could affect Britain if, for example, the value of the dollar is pushed still higher.
As with the markets, the pound-dollar exchange rate has largely levelled out since Trump’s victory: the rate today (roughly $1.23 to the pound) is only slightly lower than it was two months ago, immediately before his win. On the scale of things, it’s Brexit – which prompted a 15% fall in the pound’s value following the 23 June vote, from almost $1.50 to $1.28 – rather than Trump, which is by far the bigger factor right now. If events here continue to weaken the pound against the dollar, that’s likely to be bad news for any British business importing from the US, and would see UK inflation rise if passed on to consumers.
France and Germany still have room for their own Trump or Brexit-style upset in 2017, with important elections taking place in both countries this year.
In contrast, after all the turbulence of 2016, Britain’s Conservative government, led by Theresa May, seems pretty well embedded for the rest of the parliamentary term, and the prospect of an election before the scheduled one in 2020 is unlikely. This at least takes one uncertainty out of the equation for British business, though it arguably pales into insignificance against what many see as the continued lack of clarity – or strategy – over Brexit negotiations.
In the area of defence and foreign relations, Trump has raised eyebrows with his praise for Russian President Putin, and his ambivalent tone towards the collective defence alliance Nato – of which the UK is, of course, a member.
Trump’s questioning, before his election, of whether the US would come to the aid of a Nato member that was attacked – another example of his “America first” tone – is more worrying for the alliance’s former Eastern Bloc members, such as the Baltic States or Poland, than for the UK.
At the same time, the expectation that Trump will massively increase US military spending could be good news for defence manufacturers – though again, US firms may well be in the driving seat. For now, a priority for UK defence specialist BAE Systems is clarity over the F-35 defence programme, which Trump has threatened to scrap.
Bear with us on this one…
Here at Converge, we’ve written before about the immense power of Twitter as a business tool, whether that’s in terms of connecting with influencers, or using lists to organise useful information and contacts. There are many real examples, including here in the North East, of businesses using Twitter to build their brands and drive awareness, traffic and sales – a strategy that business-savvy Donald Trump seems to have used to good effect.
If, as seems likely, the new president intends to continue using Twitter as a platform for his announcements and policymaking, then perhaps the social network will be an unintended winner from his election – cementing its position as the go-to platform for businesses looking to make an impact and keep abreast of all the latest developments.
Perhaps not surprisingly, the conclusion of this article – much like those we’ve cited – is that all the different factors in play make it difficult to predict precisely what impact a Trump presidency will have, beyond the expectation that there will be implications for British business one way or another, directly or indirectly.
In some respects, you can argue that it’s Trump’s strident views on other issues, such as climate change and immigration – which horrify lots of people, but have clearly resonated with many others – that are likely to be most game-changing. The world will be watching closely to see if Trump’s actions in these areas prove as strong as his rhetoric.
For now, though, it’s the uncertainty about what will happen that arguably has most potential to be damaging. Uncertainty in the British and global economies can mean UK businesses putting off important business decisions – hence the post-Brexit reassurance demanded by Nissan before it would commit to building new models in Sunderland – though on the uncertainty front, our own impending negotiations with the EU surely out-trump Trump.
As for North East and UK business, we have little option in 2017 but to keep doing what we do best – getting on with the job of delivering our goods and services, and delighting our customers, while seeking to ride out any bumps and embrace the opportunities.
Written by Graham Soult
Original Trump photograph by Michael Vadon, and licensed under the Creative Commons Attribution-Share Alike 2.0 Generic licence