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Donald Trump was in the snows of Iowa for the US state’s Republican primary on Monday, rather than snowy Davos. But the former president’s name resounded all week through the corridors and coffee bars of the Swiss resort. US executives at the global confab sounded notably more sanguine than foreign business people and political leaders about his potential return. With Trump already closing in on the Republican nomination after his Iowa victory, however, US businesses should be as concerned as non-US counterparts about what this could mean for them, and for the world.
US businesses have reason, for now, to project calm. They liked the tax cuts in Trump’s first term, which they expect he would extend in a second. Despite his protectionism, the US economy performed well; stock prices rose. Many US executives are hopeful that the day-to-day running of the economy and business under a Trump 2.0 could be largely ringfenced from shenanigans in the White House, as last time round. And they see no reason to antagonise a man they might soon have to work with again.
Yet a second Trump presidency is being comprehensively planned for in a way the first never was. Trump’s 2016 victory surprised his party. He has since taken over the Republican soul, and a network of conservative think-tanks is preparing detailed policies, databases of suitable staff and even a “training academy” on governing for a Republican president — presumptively Trump. Since he has never been one for policy minutiae, the likelihood is he would simply follow much of the programme, which is available for anyone to read.
The return of a president who tried to overturn the 2020 election result, has vowed retribution, and is armed with a meticulous, highly radical blueprint — even if not every element is objectionable in itself — is not a prospect business or US allies should relish.
What should worry business? Trade policy, for one. In contrast to his ad hoc tariffs and duties last time, Trump has floated the idea of a 10 per cent universal tariff on imports — a modern-day version of the Smoot-Hawley tariff of 1930. There is a strong anti-tech vein running through the programme of his conservative backers, who blame Big Tech for alleged leftwing bias and enabling the “Great Awokening” they aim to reverse. His intention to gut the Inflation Reduction Act raises questions for companies trying to make deals on the basis of that legislation.
Big Oil and the fossil fuel industry, real estate and associated sectors might hope to gain from a second Trump administration. But all of business and finance would suffer from the erosion of checks and balances represented by the election of a man who had tried to subvert US democracy, and his plan to replace career civil servants — including in security, justice and law and order — with people loyal to him.
They would lose out, too, from the rise of core geopolitical risk inherent in the ability of a Trump surrounded by pliant loyalists to pursue his often erratic whims — in reshaping policies on issues from US membership of Nato and support for Ukraine to its stance on China.
After Trump’s crushing win in the Iowa caucuses, unless either Nikki Haley or Ron DeSantis can make a breakthrough in Tuesday’s New Hampshire primary, both may struggle to raise further campaign financing. Trump could rapidly become the presumptive nominee. The ex-president still faces multiple charges that could put him in jail rather than on the ballot. But corporate and political leaders well beyond those who gathered in Davos this week must start preparing for the disquieting possibility, at least, of his return to power.
Source: Economy - ft.com
