What does the US election result mean for the UK?
America has gone to the polls and the results are in - Donald Trump will be the country’s next President. But what does that mean for us this side of the pond? We investigate whether this could affect your business…
Here in Britain we still have uncertainty following the EU Referendum - especially now with the High Court ruling preventing Theresa May invoking Article 50 without the support of Parliament.
Supposedly the election of Brexit-supporter Trump should be in Britain’s favour when looking to strike trade agreements with America, post-Brexit. However, experts warned earlier this week that global markets will be plunged into turmoil if Trump is elected, with a drop in US stocks similar to the financial crisis.
The victory could trigger short-term market ructions and inflict long-term damage on the world’s biggest economy.
Trump has rejected the Republican party’s policy with his ‘America First’ mantra - he is critical of America’s trade deals and is rejecting free trade and backing tariffs to protect US industries from what he describes as unfair competition. This could damage American industries that depend on international supply chains and trigger a trade war, as well as shrink globalisation and cut business opportunities for its partners, including the UK.
The election could have global repercussions and place uncertainty on currency markets, so business owners should be prepared. But is it all negative? The following quote comes from the UK head of a leading US bridal company with wide distribution across the UK:
“Whilst the result is disappointing for global politics and maybe world peace, I think it will have minimal effect on consumer spending and more specifically the bridal sector. In the US the majority of states supported Trump, so there may be a feel good factor which may lead to more weddings and higher spending in the short to medium term. I don’t see any impact in the UK or Europe in the foreseeable future, although the US Dollar may weaken slightly helping prices when buying from the US or Far East. However, the damage done to the Pound by Brexit is far more of a problem and will definitely have an impact on UK inflation and consumer spending over the next 12 months.”
What are your thoughts on the result? We would love to hear from you! Join the conversation in the comments below, or email email@example.com
“Election thoughts: My initial reactions were shock and upset. Donald Trump as the 45th President of the United States? That can’t be… As a liberal I have great concerns for the freedoms we have achieved in the USA in the last 8 years under Obama. I worry for friends and family and their liberties being taken away. There have been so many positive changes towards equality in the last two Presidential terms, and I hope our progress is not lost.
“As a business owner that imports goods from abroad into Europe and America I have many concerns over the changes Trump is looking to impose. In his 100-day plan he proposes to brand China as a currency manipulator causing millions of Americans to lose their jobs, and businesses that produce in China will struggle to cope with the increased costs, and the markets reaction to the increased pricing. This rash action, if effective immediately, would be devastating to business owners everywhere. It would cripple Chinese production and do irreparable damage to their economy as well. He has discussed invoking a 45% tariff on Chinese imports, which is more than a 150% increase over the current import tax. This would force business owners to increase prices by at least 30% to cover the additional cost of Made In China goods. Imagine what this would do to our industry…
“Why is he proposing these changes? Does he think America has a willing and skilled workforce? The reality is that America has a very small amount of skilled pattern and dress-makers and even if companies wanted to produce locally, they would be hard-pressed to find the skilled workers necessary to do so. Could America’s dress-makers produce gowns for the 1.6 million weddings annually? I cannot begin to fathom the retail price increases that we may see on Made in China goods. Currency inflation would be extraordinary with Trump’s tariff plan, and hundreds of thousands could lose their jobs.
“It is doubtful that the additional tariff would be enough of an incentive for companies in the fashion industry to produce in America, even coupled with subsidies for creating new jobs! It is possible that the increased demand for Made in USA production would increase the cost of goods for companies already producing in the USA making it more difficult for brands that are already producing locally, and increasing Made in USA retail prices as well.
“My hope is if Trump is serious about these changes, he considers business owners, like himself, that rely on Chinese production. At minimum, he must afford us the consideration to allow us to plan for changes that he plans to impose. An immediate change to policy would be devastating to companies that produce solely in China, and it would rock not only the fashion world, but all industries.
“During his acceptance speech Mr. Trump claimed he will work for all Americans not just those that helped elect him. He said he will work to unite America. I hope he listens to the politicians and lawmakers despite the many attacks he launched during his campaign, and gets the advice he needs to curtail some of his radical plans. We can only wait and see…” Justin Warshaw, Justin Alexander