What Does Trump’s Triumph Mean for British Businesses?

In a surprising turn of events, Donald Trump has won the 2024 US presidential election, marking his return to the White House with a historic victory. The former President’s comeback has US markets buzzing while governments worldwide attempt to anticipate the impact of his radical economic policies.

For small business owners in the UK, Trump’s renewed ‘America First’ agenda and promises of tariffs on foreign goods raise questions about trade, inflation and the potential implications for the British economy.

The Election

Trump’s victory came after several wins in ‘swing states’, including Pennsylvania, Wisconsin, North Carolina and Georgia. Addressing a jubilant crowd of supporters in Florida, he announced an “unprecedented and powerful mandate,” underscoring his plans for radical policy shifts. The 78-year-old’s campaign largely revolved around stimulating the US economy, securing borders and a potential rollback of climate and regulatory policies.

Republicans regained control of the Senate, consolidating Trump’s power. Kamala Harris, who ran as the Democratic nominee, has not yet conceded, but many of her supporters have admitted defeat. Meanwhile, international leaders, including Prime Minister Keir Starmer and his Foreign Secretary David Lammy, face the challenge of stabilising diplomatic relations with Washington, DC.

Market Reactions

Following Trump’s victory, financial markets saw immediate reactions. The US dollar and stock markets surged, driven by expectations of corporate tax cuts, trade tariffs and deregulation. Notably, industries like banking and fossil fuels experienced a lift, with shares in American banks and oil companies rising. On the other hand, renewable energy stocks saw a decline as Trump’s win suggests a rollback of climate initiatives pursued by his predecessor, Joe Biden.

For small business owners on this side of the pond, these market reactions signal potential risks and opportunities. Businesses reliant on trade with the US may see price volatility. Companies with American clients or suppliers could also experience shifts in demand due to Trump’s protectionist stance, affecting costs and supply chain stability.

Transatlantic Trade

During his campaign, Trump emphasised his intent to protect American jobs and industries by imposing broad tariffs on imports - a stance that could profoundly impact British exporters. Trump has previously stated that tariffs are a “source of leverage” and hinted at expanding them across sectors. This expansion could mean higher costs for UK companies exporting goods to the US.

The UK Government, along with the European Union, is already preparing for possible trade friction, including retaliatory tariffs on American goods if necessary. For small businesses, this development introduces uncertainty around pricing, making strategic planning complex.

Impact on Inflation and Interest

A hallmark of Trump’s economic promises has been significant tax cuts, particularly benefiting domestic businesses. This influx of money into the US economy could increase inflation. Rising inflation might put pressure on central banks, impacting global interest rates. If the US slows down interest rate cuts due to inflation, the Bank of England may be forced to adjust its monetary policy.

For British businesses, higher inflation and interest rate movement could mean increased borrowing costs and pressure on consumer spending. Small businesses should prepare for fluctuations in borrowing costs and exchange rates, which may affect operating expenses.

UK-US Diplomatic Relations

Trump's return to the White House introduces a dynamic challenge for the Labour government. Despite proactive diplomatic engagement with Trump’s team, including efforts by the Foreign Office, there are concerns about the UK’s alignment with an unpredictable US President. Trump’s focus on an ‘America First’ approach may test Labour’s ability to balance the UK’s relationship with the US while advancing other interests in Europe and Asia.

From a business perspective, these diplomatic shifts may alter regulatory landscapes and trade policies between the US and the UK. British firms, particularly those in manufacturing, technology and financial services, should stay informed on policy changes.

Potential Impact on British Industries

Manufacturing and Export: Small businesses in manufacturing or those that rely on exports to the US could face challenges if tariffs are applied to British goods. Anticipating these hurdles by building relationships with alternative markets could reduce risk.

Financial Services: Trump’s focus on deregulating US financial markets could ripple into global markets, potentially benefiting businesses that thrive in a loosely regulated environment. However, increased market volatility might be detrimental to investment.

Renewable Energy and Sustainability: Trump’s return could mean decreased support for green energy, which may create roadblocks for British companies in this sector aiming to expand to the US. However, businesses aligned with the UK’s growing commitment to green initiatives may find opportunities in the EU.

Technology: Tech and digital businesses may see changes in data-sharing agreements and intellectual property policies, as Trump has historically favoured protecting American technology.

Preparing for an Uncertain Future

British business owners should monitor developments in trade relations. Engaging with business support organisations like the Federation of Small Businesses and more niche industry groups can provide valuable resources and insights. In an increasingly complex global market, adaptability is a beneficial trait.

While Trump’s return raises uncertainties, it could also present opportunities for some British businesses looking to innovate, diversify and strengthen operations. Entrepreneurs who remain agile and informed will be best positioned to succeed during the incoming President’s second term.

If you want to future-proof your business, now could be the perfect time to explore strategies like securing funding or streamlining operations. We’re here to help you find the best options for your small business.

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