The trade and tech wars Donald Trump is expected to unleash as central pillars of his second US presidency are the policy areas with the potential greatest impact globally, according to a new briefing.
A report by Just Drinks parent GlobalData – US Elections 2024 - Executive Briefing (Third Edition): Trump 2.0 Policy Impacts – outlines five areas with wide-ranging economic and business impacts where the new Trump administration is geared for action.
“These are: ‘trade war’ – i.e. protectionism (increased tariffs on imports into the US); ‘tech war’, stemming from the strategic US-China rivalry with broad collateral damage to the global economy; immigration control; tax cuts; and a sharp shift in energy and climate-related policies,” it says.
The report notes the motives and agendas behind Trump’s key policies are “tangled and contradictory”, resulting in a great deal of uncertainty. This is “a feature rather than a bug, which Trump likes to ‘weaponize’ for tactical advantage,” it contends.
“More tangible up-front economic pain could include an inflationary squeeze on demand and weak investment resulting from tariff and immigration policies,” the report suggests. “But Trump will push on with this agenda regardless. Leading indicators of how this policy mix plays out start with the US equity market, which will meanwhile be supported by some of his other key policies.”
Of the impacts of Trump’s trade and tech wars as the two most significant policy areas, the report states: “Their economic effects will be compounded by implications for geopolitical tensions with stark binary outcomes. Trump’s tactic of maximum pressure could lead either to confrontation with allies and adversaries alike exacerbating global fragmentation (though Trump’s track record indicates an aversion to armed conflict) – or, conversely, be used to clinch new deals. Leading indicators here include the handling of the outgoing Biden administration’s actions on AI chip exports, Russian sanctions and the TikTok ban.”
Trump’s expected tech war, meanwhile, will see him ramp up efforts in pursuit of leadership in the race to key technology frontiers, such as artificial intelligence, biotech, chips, quantum computing and space technologies, the report suggests.
It adds: “This struggle – and the associated fracturing of the global economy – will further intensify; but it might also be carried on in a new way with some potentially positive economic effects.”
Of the impending shift towards protectionism specifically, with tariffs to be levied on China and all other US trading partners, the report states: “Negative economic impacts across the world risk being compounded by the uncertainty that stems from the mixture of contradictory motives: to reindustrialize America; raise fiscal revenue; pressure other countries to do what the US government wants in other areas.”
Pre-inauguration, Trump had threatened to increase tariffs – his favourite word, he said – on goods coming into the US from day one of taking office.
The incoming president pledged import duties of 25% on Canada and Mexico, as well as 10% on global imports and 60% on Chinese goods.
But on Monday, instead of signing the executive order to this effect, he said the tariffs on Canada and Mexico could come in on 1 February and ordered federal officials to review US trade relationships for unfair practices.
Economic analysis from John Dunham and Associates and Wine and Spirits Wholesalers of America (WSWA) suggests a 25% tariff on Mexican wine and spirits could result in 14,000 US job losses, and $2.5bn lost in US economic output.
“WSWA is committed to working with the new administration to underscore the cost to our members, nearly all of which are family-owned companies,” said WSWA President & CEO Francis Creighton.
“Due to the uniqueness of the US alcohol three tier system – the global standard for alcohol regulation and distribution – these tariffs will primarily impact American businesses and consumers”.
