As with any new leader, it’s difficult to say which campaign promises will translate into policy. Mr. Trump will have a Republican led House and Senate, who in theory would support a Republican president. Yet, as Mr. Trump has repeatedly proved, he is no normal Republican and will likely be no ordinary president.
Much like the uncertainty created by Brexit, many experts are advising a wait-and-see approach to dealing with Mr. Trump’s presidency, as he is inconsistent at best between what he says and what he does.
However, here are some considerations for businesses, especially small businesses, in the UK:
Britain exports £30 billion worth of goods and services to the US, making them an important trading partner to businesses of all sizes. Trump has said that Brexit makes no difference to him, in terms of negotiating trade deals, but that does not mean he will be offering the UK any special favours.
Trump is generally against many of the trade agreements to which the US is currently party, including the North American Free Trade Agreement (NAFTA). He has taken a clearly ‘America-first’ tone when it comes to trade, but it’s hard to know how that would play out in future US/UK agreements. Some experts suggest that if Mr. Trump engages in trade wars, that could in turn lead to panic or long-term uncertainty in asset markets.
Christian Stadler, professor of strategic management at the Warwick Business School, suggests that some industries, such as steel, should expect a dramatic rise in import duty.
However, after an initial hit, experts predict the dollar will remain strong against the pound, which would benefit exporters, but force importers to pass higher prices on to consumers.
Regardless, British businesses that export goods to the US should be on alert; if Brexit results in more difficult trading with the E.U. (which it is likely to do — but to what degree is still unknown), UK companies will want to protect their deals with the US.
During any political upheaval, investors tend to become more conservative, and markets can suffer. The biggest impact of this will be felt by start-ups and small businesses hoping to secure funding. Brexit has already made this difficult for many small businesses, and Mr. Trump’s inauguration will likely only add to the uncertainty.
While Trump has made promises to invest heavily in US infrastructure, it can be assumed that most of these contracts would go to US companies. Prof. Stadler of Warwick Business School suggests that UK companies could set up subsidiaries in the US to circumvent trade problems and make the best of new investments in infrastructure.
Tourism and travel
Many UK small businesses rely on tourism, which is expected to take a hit because of Brexit. But some analysts suggest that if Mr. Trump enacts the tax cuts he promised on the campaign trail, Americans may have more discretionary money to spend on travel to the UK.
However, UK business people may have more difficulty getting permits to work in the US if Mr. Trump clamps down on immigration and border controls, as he has also promised to do.
How to prepare?
According to economic commentator Jeremy Cook, there’s very little UK businesses can do to prepare in these uncertain times. The best many can do is consolidate investments and save for a future rainy (or even stormy) day.
I suggest that companies of all sizes should dig in and do some serious scenario planning, exploring all options — best and worst-case scenarios — then make preparations to shift tactics based on what comes to pass. This is something I have done with a number of clients of mine following the Brexit vote and is something worth repeating now.
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