Election 2024: The Ripple Effects for Global Trade and Business

Introduction

With the 2024 election outcome shaping the future of globalization, here’s a comparative look at how each candidate’s approach may influence key aspects of international business. Each candidate brings a distinct perspective to trade, technology, climate, and financial stability, which could alter the business landscape both in the U.S. and worldwide.

1. Trade Policy and Globalization

Trump (Pros):

• Focus on American Jobs: Potentially increases manufacturing and employment within the U.S. by promoting local production and incentivizing domestic industries.

• Bargaining Leverage: Strong negotiation stance may lead to more favorable terms for American businesses in trade deals.

Trump (Cons):

• Protectionism Risks: Could lead to tariffs and stricter trade barriers that may disrupt global supply chains and raise costs for international companies.

• Trade Tensions: Risk of escalating conflicts with major trading partners like China and the EU, potentially leading to retaliatory measures.

Harris (Pros):

• Pro-Globalization Stance: Likely to support free trade agreements and promote international economic collaboration, beneficial for businesses reliant on cross-border operations.

• Reduced Tariffs and Barriers: Aims for smoother, cost-effective trade relations, potentially reducing costs for multinational companies.

Harris (Cons):

• Increased Competition for Domestic Firms: Lower trade barriers could increase foreign competition for U.S.-based companies, especially in industries sensitive to imports.

• Dependence on Global Markets: Favors integration into global markets, which could be risky during international economic volatility.

1. 2. Supply Chain and Reshoring

Trump (Pros):

• Focus on Reshoring: Supports policies that incentivize U.S. companies to bring production back home, potentially reducing dependence on foreign suppliers.

• Supply Chain Resilience: Emphasis on domestic production could improve resilience against global supply chain disruptions.

Trump (Cons):

• Higher Production Costs: Shifting supply chains to the U.S. may increase costs for businesses due to higher labor and production expenses.

• Complex Restructuring for Multinationals: International firms might face costly adjustments if expected to localize supply chains to the U.S.

Harris (Pros):

• International Cooperation for Supply Chain Stability: Likely to focus on partnerships with allies, enhancing supply chain efficiency through global collaboration.

• Support for Multinational Models: Policies that favor international trade reduce the need for complex restructuring, helping companies with global supply chains maintain cost-effective operations.

Harris (Cons):

• Vulnerability to Global Disruptions: Dependence on international supply chains could expose U.S. businesses to risks during global crises.

• Reduced Focus on Domestic Industry: A more global supply chain focus might decrease the emphasis on supporting U.S.-based manufacturing jobs.

Note: Comparing Trump’s presidency (2017–2021) with Biden’s (2021–present) on bringing production back to the U.S. and generating jobs reveals different approaches toward the same goal. Both administrations prioritized support for U.S. manufacturing; however, Biden’s policies have emphasized infrastructure investment and high-tech manufacturing, while Trump’s focused on traditional manufacturing and reshoring, largely through tariffs.

3. Technology and Digital Trade

Trump (Pros):

• Domestic Technology Investments: Policies likely to prioritize investments in U.S. technology sectors, potentially boosting domestic innovation.

• Data Privacy and Security: Strict national security controls could protect U.S. data assets and intellectual property.

Trump (Cons):

• Potential for Digital Trade Barriers: Preference for strict data privacy regulations may disrupt international digital trade and complicate compliance.

• Less Alignment on Global Standards: Different standards could create friction with the EU and other key markets, impacting tech firms operating internationally.

Harris (Pros):

• Global Standards Alignment: Likely to support international standards for digital trade, facilitating smoother cross-border operations.

• Expanded Digital Market Access: Open approach could encourage growth for U.S. tech firms by improving digital trade access and reducing regulatory inconsistencies.

Harris (Cons):

• Potential Security Risks: Broader digital integration may introduce data privacy challenges and risks of cybersecurity threats.

• Compliance Costs for Smaller Firms: Adopting international standards could add costs for U.S. companies unfamiliar with global digital requirements.

4. Climate Policy and ESG Standards

Trump (Pros):

• Reduced Regulatory Costs: Relaxed ESG and climate standards could reduce compliance costs, benefiting industries like energy and manufacturing.
• Increased Energy Production: Pro-oil and gas policies may drive down energy costs domestically, helping industries reliant on fossil fuels.

Trump (Cons):

• Potential Environmental Backlash: Reduced focus on sustainability could strain relations with environmentally conscious markets, particularly in Europe.

• Investor Hesitancy on ESG: Companies lagging in ESG standards may struggle with access to global capital markets as investors increasingly prioritize sustainability.

Harris (Pros):

• Strong ESG Focus: Support for stringent environmental standards aligns with global ESG priorities, appealing to sustainability-focused investors and consumers.

• Boost for Clean Energy Innovation: Likely support for renewable energy could create growth opportunities in green sectors.

Harris (Cons):

• Increased Compliance Costs: Stricter regulations may increase operational costs for companies with high carbon footprints, especially in traditional energy sectors.

• Potential for Domestic Job Losses: Transitioning away from traditional energy could lead to job losses in oil and gas sectors without alternative employment options.

5. Financial Markets and Dollar Stability

Trump (Pros):

• Dollar Focused Fiscal Policy: Favorable to measures that boost the dollar, potentially stabilizing U.S.-based assets.

• Strong U.S. Economy Priority: Policies aimed at economic growth could make the U.S. an attractive investment location, supporting the dollar’s dominance.

Trump (Cons):

• Market Volatility Risk: Aggressive fiscal policies could introduce volatility, impacting businesses with international transactions.

• Risk to Global Financial Stability: A highly nationalistic approach could reduce trust in the dollar as a stable reserve currency if trade tensions intensify.

Harris (Pros):

• International Financial Stability: Support for multilateral policies may enhance global economic cooperation, stabilizing international markets.

• Improved Investor Confidence: Pro-globalization approach might strengthen the dollar’s reserve status and provide confidence to global investors.

Harris (Cons):

• Increased Regulatory Complexity: Potentially higher regulatory scrutiny for financial institutions could increase costs and reduce flexibility.

• Dependence on Global Markets: Open international approach could expose the dollar to vulnerabilities if global economic challenges arise.

Summary

The 2024 election offers starkly different paths for U.S. involvement in globalization. Trump’s approach leans toward protectionism and domestic strengthening, focusing on reshoring, reduced ESG obligations, and U.S.-centric supply chains. In contrast, Harris supports deeper international alliances, ESG integration, and global tech standards. Both approaches present unique opportunities and challenges, with global businesses needing to prepare for potential shifts depending on the November outcome. It will also have significant impacts on many countries worldwide; for example, Germany is forecasting a negative business impact for the local economy of approximately 165 billion US dollars over the next four years if Trump wins.

Go To’s: With less than 10 days remaining until the U.S. election, businesses are best positioned to ‘wait and see.’ Rather than making immediate adjustments, companies should be prepared to react swiftly post-election, aligning strategies with the winning administration’s policies.

And if you’re a U.S. citizen, go vote for the candidate and policies you believe will shape the right future for years to come.

Here are the key “Go-To’s” or actionable takeaways for businesses preparing for potential shifts in globalization based on the U.S. election outcome:

1. Monitor Policy Signals: Stay updated on candidates’ policy shifts regarding trade, tariffs, and international partnerships, as these could directly impact your business operations and costs.
2. Strengthen Supply Chain Resilience: Consider diversifying or localizing parts of your supply chain in anticipation of potential trade restrictions or reshoring incentives, especially if Trump wins.
3. Evaluate Compliance and ESG Readiness: Prepare for possible changes in ESG standards and regulatory requirements, particularly for climate-related policies if Harris wins, to align with evolving global standards.
4. Optimize for Digital Trade and Data Standards: Anticipate adjustments in data privacy, digital trade, and cybersecurity requirements under either administration. Aligning with international standards can help facilitate smoother cross-border operations.
5. Currency and Financial Risk Management: With potential changes to dollar stability and international economic alliances, companies should monitor currency fluctuations and hedge risks as necessary.
6. Talent and Workforce Strategy: Be prepared to adapt your workforce strategy in response to potential wage changes, labor policies, and job market dynamics that could emerge under each candidate’s administration.
7. Scenario Planning for Market Entry: For companies considering international expansion, align your strategy with each administration’s expected approach to foreign policy and trade relations to optimize for regulatory ease and market accessibility.

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