Analysing the impact of Trump’s victory

Following a decisive victory, Donald Trump has become the 47th President of the United States and the second president to hold two non-consecutive terms. He proudly announced, “God spared my life for a reason.” ¹

For those in America and around the world who didn’t expect a convicted felon with six bankruptcies to emerge victorious, there will be plenty of soul-searching in the months to come. The Democrats and global liberal elite seem to have misjudged the political mood of many Americans, revealing a deep divide and lack of understanding of the issues that have driven Trump to success.

Markets like certainty and have responded to the compelling win with the dollar gaining strength against most major currencies and the main three US indexes soaring. Bitcoin reached a record high following Trump’s endorsement of cryptocurrency. ²

However, commentators fear that the highs could be short lived with market volatility and concerns that the long-term outlook for the stock market is “murky at best”. ³

Trump is never short of headline grabbing soundbites and hyperbole. Join us in an analysis of his quotes, to better understand his motivations and possible impact on the global economic landscape.

“Very left wing” – Trump, Starmer and the UK

We’re not necessarily set for a smooth ‘special relationship’. Trump recently described Sir Kier Starmer as “very left wing” ⁴ and Starmer has in the past described him as “repugnant” and not someone he would wish to have round for dinner. ⁵ In 2018, David Lammy, now the UK’s Foreign Secretary described Trump a “woman-hating neo-Nazi sympathising sociopath.” ⁶

Of course, damage limitation from the UK has commenced, with warm congratulations as the political game of cordiality ensues. Starmer met with Trump back in September for a meeting described as ‘good’ ⁷ and Trump frequently references his own personal connections and affinity for the UK. But will Britian be left out in the cold? There will be plenty of potential for political differences with Trump on issues such as Ukraine, trade with the EU and the environment.

“To me, the most beautiful word in the dictionary is tariff ” ⁸ – Trump and trade

In Trump’s campaign, he repeatedly stated that he intends to impose tariffs on imports of either 10% or 20%, with additional high tariffs on Chinese imports. The goal is to stimulate American manufacturing, but independent studies have indicated it might raise costs for the average American. ⁹ The risk is it will spark trade wars, and potential tit-for tat tariffs imposed by other countries.

Tariffs could significantly impact British trade with America, at a time when demand for British products such as food and drink has been increasing. ¹⁰ The National Institute of Economic and Social Research has warned that US tariffs could halve UK economic growth in the next two years. ¹¹ This increases the pressure on the British-EU trade relationship and could amplify calls for Britain to rejoin the single market. ¹²

China is a challenge for America. In Trump’s first term, punitive tariffs on Chinese imports were reciprocated by Beijing. ¹³ A key vote winning message he will be keen to uphold is protection of American manufacturing jobs.

Since his victory, China has responded by providing local governments with a $1.4 trillion boost but has not released new stimulus. This response will be held back for use later in case of trade wars next year.¹⁴

“Stop wars” ¹⁵ – the Trump impact on conflict

Trump has an “America First” anti-war approach that centres on minimal intervention so as not to drain US resources and affect trade. Trump’s criticism of NATO, and the risk of American withdrawal, raises questions about the power of the alliance’s deterrent effect in the future. ¹⁶

Trump once claimed he could end the Ukrainian war in twenty-four hours. ¹⁷ A bold assertion that fails to clarify the concessions to Russia that he would deem necessary, with ongoing questions arising over Crimea. Trump craves the deal-maker status of being the only person able to end the war where others have failed.

It’s no wonder that President Zelensky is now choosing his words carefully, mentioning the Republican’s “commitment to the ‘peace through strength’ approach” and stating, “We rely on continued strong bipartisan support for Ukraine in the United States.” ¹⁸

Given that Trump’s Republican Party blocked aid to Ukraine from October 2023 to April 2024, Zelensky clearly has cause for concern.

And what of Trump’s impact on the Middle East?

Caught between a wish to show support for the Israeli leadership while also bringing peace, it remains to be seen how Trump will engage with thorny issues such as seeking ceasefire in Gaza in exchange for hostages held by Hamas. ¹⁹

“Drill, baby, drill” – Is this the end of climate action?

When one of the world’s largest emitters of greenhouse gas is governed by a president who believes green energy is a scam and climate change a hoax, a greener future seems vulnerable. There is a risk climate action will falter under Trump’s leadership, despite an election cycle where America faced weather disasters such as Hurricane Helene. A pro-drilling approach will increase reliance on oil and gas, with the extra supply potentially reducing global energy prices.

In his first term, Trump removed America from the Paris Agreement commitment to keep warming to below 2°C. Withdrawal again now could impact other countries, normalising a failure to decarbonise in a race to the bottom. ²⁰

It seems odd to mention one person as a potential key player in this, but Elon Musk might just be someone who has influence with Trump. Musk has said climate change is “a major risk” and claims to have done “more for the environment than any single human on Earth.” Musk’s commercial interest in electric vehicles led to Trump saying he has “no choice” other than to support EVs due to Musk’s endorsement of his campaign. ²¹

With Musk’s input and indeed his personal business goals, it is possible that climate change action could be reframed to Trump supporters not as punitive and restrictive but about American tech leadership, new jobs, manufacturing, national security and economic growth. After all, solar power has the potential to become the cheapest form of energy.

The impact on portfolios

The only thing we can be sure of with Trump is his unpredictability—a trait that can be both a blessing and a curse. His words are often entertaining, sometimes shocking, and not always aligned with policy or action. This makes predicting the impact on portfolios challenging, especially with the new president not taking office until January 20th.

While equity markets thrived during Trump’s first term, it would be unwise to assume history will repeat itself. Trump is skilled at dominating headlines, but our focus will remain on the factors that matter most for the global economy, such as:

Key appointments in his administration
Movements in the US Dollar against other currencies
Inflation trends under his leadership
The potential introduction of tariffs and their economic impact
The implications of his stance on the Paris Agreement

Although what happens in America will be significant, Trump’s presidency is just one of many factors influencing the global economy as we head into 2025. Our investment team is monitoring a broad range of scenarios and their potential impact on markets, ensuring we remain ready to adapt. As always, we advocate for a calm, measured approach to market variability, focusing on long-term goals rather than short-term noise.

1 Donald Trump Speech: ‘God spared my life for a reason’: Trump’s top quotes from victory speech – The Economic Times

2 Global Financial Markets Effects of Trump’s Election Showing

3 This Trump trade euphoria is likely to fade fast | CNN Business

4 Britain’s hunt for a Trump whisperer – POLITICO

5 What has Keir Starmer said about Donald Trump and what is Labour response to US election result? | The Independent

6 Britain has many reasons to fear a Trump comeback | Fortune Europe

7 https://news.sky.com/story/us-election-what-would-a-donald-trump-or-kamala-harris-victory-mean-for-the-uk-13248577

8 How Trump’s tariffs would work | CNN Politics

9 How Trump’s tariffs would work | CNN Politics

10 No winners if Trump sparks global trade war, Starmer warned

11 Britain has many reasons to fear a Trump comeback | Fortune Europe

12 No winners if Trump sparks global trade war, Starmer warned