As the United States gears up for the 2020 presidential election, the possibility of a second term for President Donald Trump is becoming increasingly likely. While his policies and actions have been met with both praise and criticism, there is no denying that a second Trump presidency could have a significant impact on the global economy, including UK SMEs. In this article, we will explore how a second Trump presidency could reshape UK SMEs’ trade, tax, currency, and supply chain strategies, and the challenges and opportunities that “Trumponomics” could bring in a post-Brexit climate.
Trade Strategy:
Under President Trump’s first term, the US has been focused on renegotiating trade deals and implementing protectionist policies. This has led to a trade war with China and strained relations with key trading partners such as the EU and Canada. If re-elected, Trump is likely to continue his “America First” approach to trade, which could have both positive and negative implications for UK SMEs.
On one hand, UK SMEs that export goods to the US could face increased tariffs and trade barriers, making it more difficult and expensive to do business with the US. However, on the other hand, a stronger US economy could lead to increased demand for UK goods and services, creating new opportunities for UK SMEs to expand their export markets.
Tax Strategy:
President Trump’s first term saw the implementation of significant tax cuts for businesses, including a reduction in the corporate tax rate from 35% to 21%. If he is re-elected, Trump has promised to further reduce the corporate tax rate to 15%, which could be a game-changer for UK SMEs looking to do business in the US.
A lower tax rate could attract UK SMEs to invest in the US and set up operations there, taking advantage of the lower tax burden. This could also lead to increased competition for UK SMEs in their own domestic market, as US companies may be able to offer lower prices due to their lower tax liabilities.
Currency Strategy:
The uncertainty surrounding Brexit has already had an impact on the value of the British pound. A second Trump presidency could further impact the currency exchange rate between the US dollar and the pound, depending on how the US economy performs.
A stronger US economy could lead to a stronger US dollar, making it more expensive for UK SMEs to import goods and services from the US. On the other hand, a weaker pound could make UK exports more competitive in the US market, potentially boosting UK SMEs’ sales and profits.
Supply Chain Strategy:
The UK’s departure from the EU has already disrupted supply chains for many UK SMEs, and a second Trump presidency could further complicate things. The US has been pushing for more stringent rules for sourcing materials and products, which could impact UK SMEs that rely on imports from the US.
On the other hand, a stronger focus on domestic production in the US could create new opportunities for UK SMEs to supply goods and services to US companies. This could also lead to increased competition for UK SMEs in their own domestic market, as US companies may offer similar products at lower prices.
Challenges and Opportunities:
While a second Trump presidency may bring new challenges for UK SMEs, it could also present opportunities for growth and expansion. The key to success will be for UK SMEs to be adaptable and proactive in their strategies.
One potential opportunity for UK SMEs lies in forming strategic partnerships with US companies. This could help navigate any trade barriers and provide access to the US market. Additionally, investing in technology and innovation could help UK SMEs stay competitive in the global market and attract US customers.
On the other hand, challenges such as increased tariffs and trade barriers could put a strain on UK SMEs’ finances. It will be crucial for SMEs to carefully manage their expenses and explore alternative markets to mitigate any potential losses.
In conclusion, a second Trump presidency could bring significant changes for UK SMEs. It will be essential for SMEs to stay informed and adapt their strategies accordingly to succeed in a post-Brexit and post-Trump economic climate. By being proactive and open to new opportunities, UK SMEs can navigate the challenges and make the most of the opportunities presented by “Trumponomics”.
