It was the news that very few political pundits were expecting. Donald Trump, the Republican Party nominee, will be the next president of the United States of America. Here, David Williams, Managing Director of Rhenus Logistics UK, explains what a Trump presidency may mean for the UK’s manufacturing and export industry.
“The news of Donald Trump’s victory in the 2016 presidential race has, understandably, sent shockwaves across the entire world. The result has been seen by some as a ‘second Brexit’, and raised fears that markets and currencies could crash – as they did in June.
“While it will obviously take a significant amount of time to understand the ramifications of this vote beyond the short-term, the initial reaction of markets worldwide appears relatively stable. Perhaps this is because so little is known of Trump’s economic policy.
“If, as many believe he will, Trump pursues a Reagan-esque strategy, characterised by tax-cuts and deregulation, American citizens could soon find themselves with spare cash in their pocket. While he will obviously stick to his ‘America-first’ mantra, which will prioritise US manufacturers, he has also made it clear that the UK will be near the front of the queue when it comes to trade deals.
“So what does this mean for UK manufacturers? If predictions ring true and Trump does introduce a series of tax cuts, disposable income for the average US citizen is likely to rise. This may well encourage Americans to increase their spending on British-made luxury goods, such as cars, whisky, clothing and technology. This is obviously good news for UK exporters, and I would urge them to be ready for an upturn in activity to the US.
“Alongside Trump’s election, a recent survey by the Markit/CIPS purchasing managers’ index (PMI) revealed that the weakened pound, in the wake of Brexit, has boosted exports as UK goods become cheaper for overseas buyer. Since June, the pound has fallen in value by more than 10% against the US dollar and the Euro, with the drop in sterling making goods cheaper for overseas buyers – and increasing demand for exporters.
“While 2016 has been a year of undoubted political upheaval, it’s also been a year of fantastic opportunity for growth for British manufacturers. If firms can switch their priority from domestic sales to exporting, they could benefit further. I would advise UK exporters to be as flexible as possible if they want to benefit from the projected economic climate in the US and boost their profit margins.”