Trade Relationships for The Future:
THE US Presidential Election 2020: The Impact on UK-US relations
The US Presidential Election 2020:
The Impact on
Will it be better the devil you know or time for change for the American people?
Partner and Head of Southeast Asia, Control Risks
If President Trump wins reelection, we can expect four more years of global business uncertainty, driven by his erratic approach to foreign policy, and a high probability of further escalation of trade disputes. These trends are likely to be amplified, because Trump would no longer be constrained by future reelection considerations and because multilateral institutions and alliances, which have traditionally held US policy in check, have weakened in the past four years. And if the current situation is any indication, the US is unlikely to get the pandemic under control soon, contributing to a more challenging global investment environment.
Notwithstanding the US-UK special relationship, four more years of Trump would pose challenges to the UK’s foreign policy and business. Trump is likely to escalate the US-China trade dispute, prolonging uncertainty faced by UK businesses in Asia. Prompted by broader US-China disagreements, Beijing may respond by taking regulatory action against businesses of US allies like the UK, Canada and Australia.
If Biden is elected, we can expect a more stable and predictable US foreign policy and less business uncertainty. Economists have predicted a quicker and more robust US economic recovery under Biden, based on his promises to address COVID-19 and proposed $2 trillion stimulus package to boost spending on infrastructure, climate change mitigation, education and healthcare. Such economic activity and the reduced risk of new trade escalation would bode well for UK investors.
A Biden administration is unlikely to rush into a bilateral trade deal with the UK. In its first year, the new government would focus on tackling three ongoing domestic crises – COVID-19, the economy and bitter social divisions – even as it recalibrates its approach to China. While Biden is cognisant that the US cannot step back into global agreements that have evolved over the past few years, he looks set to rebuild alliances, return to or revisit global agreements (e.g., the Paris Agreement and the Iran nuclear agreement) and leverage traditional diplomacy. This would entail the US playing a more active role at regional summits and reprising its leadership role on issues such as setting standards for the digital economy.
Regardless of who occupies the White House, the US will continue to focus on Asia and remain “tough on China”. Although a Biden administration would conduct its relationship with China in a more strategic manner, focusing on cooperating where possible (e.g., climate change) and competing where necessary, the US-China rivalry is here to stay. This also means that, regardless of the outcome after November 3, UK businesses operating in China are likely to face increased regulatory scrutiny, and they should ensure their compliance programmes, stakeholder engagement plans and government relations initiatives are updated, robust and fit-for-purpose, to mitigate risks to their operations.
On 3rd November, America will either re-elect Donald Trump or newly elect former Vice President Joe Biden to the office of the President. The campaign has become so divisive that at the time of writing, over 58 million votes have already been cast(1) with talk of voter suppression and absentee ballots regularly making the news. Whatever the outcome, the results of this election will impact the geopolitical relationships across the globe for at least the next four years.
In this special feature, experts from our US Election event this month provide their take on the possible outcomes.
(1) - Associated Press, 25 Oct 2020
The gold market is very
liquid. The London OTC gold market is the world’s largest, and over $435bn of physical gold is held in vaults in London.