US Election Scenarios: Trump 2.0

Welcome to the Audere Atlas, the Audere Group’s fortnightly update on global geopolitical trends, how we engage with them, and what they mean for your organisation.

With the US election race neck-and-neck leading into the 05 November polls, the next two editions sketch out the business implications of either candidate’s victory. We start with both the risks and opportunities presented by a ‘Trump 2.0’ scenario, exploring how to avoid the dangers associated with a renewed America First agenda, as well as exploiting the opportunities it presents for business.

The Audere Atlas offers timely, actionable insights that both support key decision-making and highlight areas for further exploration and understanding.

Bottom Line

A Trump victory in the November 2024 US election is a realistic possibility, carrying both risks and opportunities for business. While a Trump victory is not a monolith, it presents a range of scenarios in which his campaign pledges are delivered to varying degrees, a renewed ‘America First’ programme would likely increase tariffs, create regulatory divergence between the US and key trading partners, and jeopardise geopolitical norms. Simultaneous deregulation, tax reforms, and shifting global supply chains would nonetheless present possible benefits for firms operating in the US, as well as those able to take advantage of strategic realignments.

As Donald Trump’s campaign gears up for the final stages of the 2024 US election race, there is a realistic possibility that he could return to the White House, especially after Kamala Harris’ thin margin in national polls took a hit in the face of various ‘October surprises’. Hurricanes Helene and Milton and the widening war in the Middle East have been the subjects of intense Republican spin, aiming to portray the Biden/Harris administration as inept. Results in key swing states—namely Pennsylvania, North Carolina, Nevada, Georgia, Arizona, Wisconsin, and Michigan—will almost certainly decide the election outcome, but the race is extremely tight.

A Trump victory is not a monolith but presents a range of scenarios in which his campaign pledges are delivered to varying lengths. Much depends on the extent of support from lawmakers, which at this time is highly unpredictable. Assuming a Republican-led Congress, we might see a ‘limited Trump’ scenario, where personal tax cuts from the 2017 tax law are extended, spending levels are increased moderately, and the president uses executive powers to reduce immigration and impose selective tariffs on China and the EU. This could boost real GDP, but it would likely lead to moderate inflation. On the other hand, a ‘full-blown Trump’ scenario assumes deeper tax cuts, particularly for corporations, paired with much higher spending and more aggressive immigration curbs. Broad-based tariffs would be imposed on key trading partners, triggering trade wars that outweigh tax relief benefits. In this case, real GDP could fall, with the economy slowing significantly and inflation rising more sharply.

In the end, both candidates should expect a split Congress where they will rely on regulatory and executive action to pursue their respective programmes. Trump’s willingness to wield executive authority would therefore also have some bearing on the extent to which his stated policy programme is implemented.

In either scenario, a second Trump presidency would almost certainly see a reimplementation of many of the ‘America First’ policies that characterised his first term, with a significant emphasis on reducing reliance on foreign markets. This primarily means China, but other key trade partners are likewise in the sights of Trump’s 2024 policy programme, dubbed ‘Agenda 47’ in a nod to this election being a competition for the 47^th Presidency. His protectionist stance threatens to disrupt the business environment for UK and EU multinational companies (MNCs) that rely on the US market. Trump’s first term saw tariffs on EU steel (25%) and aluminium (10%), which seriously strained transatlantic trade, something likely to be exacerbated in a second term, with Trump’s team proposing a universal tariff on all imports.

Trump has doubled down this tariff policy over the summer, citing potential import tariffs of 10-20%. While these figures have since been downplayed by his campaign, former Trump trade official Robert Lighthizer has indicated that unspecified “foreign governments”—likely referring to China and the EU—would face “even harder times” under a second Trump Presidency.

Beyond trade policy, Trump’s anticipated tough stance on China, and wavering support of Ukraine (both inherited from his previous time in office) are likely to foster geopolitical instability. The former president has vowed to revoke China’s Most Favoured Nation status (which would end China’s preferential US market access), reduce imports of essential goods, and ban federal contracts with firms outsourcing to China, and has pledged to “end the war in Ukraine” on his first day in office. While the latter policy is highly uncertain and likely to face significant challenges, in presenting a break with the approach of the Biden administration, as well as with those of key allies in Europe and Asia, both set the stage for volatile great power relations.

On foreign policy, Trump has repeatedly criticised NATO, accusing member countries of not contributing their fair share to the alliance’s defence budget. He has also questioned the necessity of the alliance in its current form, threatening to reduce US involvement if other members do not meet their defence spending commitments, a stance that could potentially weaken NATO’s cohesion and its collective security framework at a time in which authoritarian regimes are becoming increasingly aggressive and assertive.

Domestically, Trump has touted populist slogans to “drill baby drill,” as well as to invest more in defence, policies that look set to roll back ESG programmes favoured by the Democrats. Trump’s oil policy emphasises increasing domestic energy production, particularly through expanding drilling for oil and gas on federal lands as well as offshore, aiming to reduce regulations on the energy sector, promote energy independence, and roll back climate-focused policies that prioritise sustainability over economic growth.

So What?

For global multinationals, a second Trump presidency would present a complex mix of risks and opportunities.

Trump’s protectionist trade policies pose significant risks to sectors heavily involved in exporting to the US. Tariffs on key industries will certainly inflate costs, reduce profitability, and create barriers to market access. For businesses reliant on exporting to the US, the higher costs driven by Trump’s universal tariffs would hit bottom lines hard, particularly in manufacturing and commodity trading. For Europe and the UK, key sectors, including pharmaceuticals, automotive, and machinery, would bear the brunt of these trade measures.

Geopolitical tensions are another area of concern. Trump’s aggressive stance on China is likely to escalate trade wars, adding to inflationary pressures and forcing firms to seek alternative suppliers. Companies with integrated supply chains involving Chinese manufacturing may find it necessary to rethink their global logistics and sourcing strategies. These shifts could result in higher operational costs and disrupted production cycles, with long-term implications for businesses dependent on stable and predictable trade flows.

On the other hand, Trump’s deregulatory agenda could provide relief to businesses already established in the US or looking to enter the market. Lower corporate taxes, coupled with deregulation in sectors like energy and defence, create a more favourable investment environment. Companies in the oil, gas, and defence industries, may benefit from increased US government spending in these areas, as well as planned expansion of infrastructure development projects, long championed by Trump.

Additionally, the potential realignment of global supply chains, driven by US-China tensions, may allow Western MNCs to expand their role in supplying the US market. As American firms seek alternatives to Chinese suppliers, British and European businesses could step in to fill the gap, particularly in industries like automotive, machinery, and electronics, although it will be difficult to compete with the attractive pricing of Asian competitors. This pivot could enhance supply chain resilience and reduce dependency on vulnerable or politically unstable regions, positioning UK and EU firms as strategic partners in the evolving global economy. A caveat to the potential benefits listed above is the sheer unpredictability associated with a second Trump administration. Unknown quantities such as his Ukraine peace plan or approach to NATO allies present clear holes in broad-based assessments of the effects of growing investment in strategic industries such as energy or defence. A break with Kyiv would call into question the long-term strategies of Western defence firms involved in supplying Ukraine, with negative consequences likely to outweigh any benefit from growing investment in the US military. Equally, the disruptive effects of growing geopolitical instability risk roiling the global energy market to the extent that any expansion in the domestic US oil market becomes irrelevant. The at-times erratic quality of Trump’s first term is almost certain to return if he is re-elected, and businesses must prioritise resilience to overcome the inevitable shocks.

Keen to Know More?

The uncertain geopolitical environment resulting from a second Trump presidency will require businesses to remain agile and proactive in managing risks. Firms should develop robust scenario planning, consider the diversification of supply chains, and closely monitor regulatory changes in the US to anticipate potential disruptions and capitalise on emerging opportunities.

The Audere Group offers expert risk advisory services to help companies navigate the complexities of operating in a volatile political landscape. Our comprehensive risk assessments and strategic planning insights ensure that businesses can mitigate risks and seize opportunities as they arise.

Contact us to learn more about how we can assist you in preparing for the challenges and possibilities of a changing geopolitical environment.

_{Disclaimer: The content of this report is for informational purposes only and does not constitute legal or financial advice. For further details or specific inquiries, please reach out to our team directly.}