What a Trump Presidency Means for the Global Economic Outlook and How It Could Impact Your Business
If there’s one thing that the global economy thrives on, it’s certainty. While we know that Donald Trump will be President of the United States for a second term, we don’t know exactly how his campaign promises will translate to real changes in economic policy.
You’ve heard plenty of talk about tariffs, for example. But what kinds of tariffs? On which countries or industries? Until we know the details, there is a lot that remains uncertain.
We spoke with two experts—2x CEO and coach Edward Hughes and political consultant Brent Buchanan—for their predictions on how the Trump Administration’s economic policies will impact the global economy, so you can prepare your business for what comes next. Here’s what we learned:
1. Expect Uncertainty Before Market Stabilization
Any time there is a change in administration, it takes time for campaign promises to become reality. It’s one thing to say that you’ll “end inflation” and another for it actually to happen. The uncertainty around these details may cool business fixed investment in the short term, with more macroeconomic volatility, according to UBS.
All we know right now is that we can expect things to change.
“I think we need to expect that it’s going to be a little rocky at first,” says political consultant Brent Buchanan. “The economy prefers to have consistency, and the unknown disrupts in the short term. Our government and its systems have been operating in a growth mindset for so long, that we don’t know what it actually looks like when we say trim back the government, or how the market will take it.”
Stock markets jumped immediately after election night, but we may see more volatility as Trump’s second term begins. Historically, stocks underperform early on in a new president’s term, and pick up after the midterms.
What we do know, though, is that unlike in 2016, Trump is coming to the position with experience and Congressional support. This means it’s much more likely he’ll hit the ground running—and with Republican majorities in both the House and the Senate, the Republican agenda can move forward more quickly.
Trump has already announced his major cabinet picks that will impact businesses like yours over his administration, like Cantor Fitzgerald CEO Howard Lutnick as Secretary of Commerce and Liberty Energy CEO Chris Write as Secretary of Energy. These nominees will need to go through a confirmation process, of course, but with a Republican majority in the Senate, they’ll likely go through.
“The world from a geopolitics perspective is more unstable than it was four years ago,” says coach Edward Hughes. “Business thrives when uncertainty is reduced. That’s when CEOs will make investments, launch new products, and hire new people. Because Republicans won the trifecta, there’s a lot more certainty that their domestic agenda items will get done. I think the direction is going to be clearer than usual, and rather than politicians just talking we’ll have to pay attention moving forward as things will get done.”
2. Tariffs Will Change the Global Manufacturing Landscape
One of the biggest talking points of Trump’s campaign was on tariffs. “We know they’re coming,” says Buchanan. “The question is, where, on what goods, from what countries, and how long will they stay in place?”
Trump’s proposed tariffs are larger than those imposed during his first term. As for targeted countries, Trump has already talked about China, Mexico, and Canada—three destinations that will impact the current global manufacturing status quo, especially for the automotive and tech industries.
Businesses can expect new tariffs on imported goods that may impact manufacturing practices. We may see business reshoring back to the United States or a growth in foreign direct investment, rather than importing goods and services. Says Hughes, “Tariffs of up to 60% on China would signal a serious escalation in trade tensions, affecting supply chains across industries like consumer electronics, automotive, and manufacturing. Business leaders should explore diversified sourcing strategies to mitigate such risks.”
3. The Federal Reserve Signals Interest Rate Cuts
On voters’ and CEOs’ minds this election cycle? Inflation. UBS projects that core inflation will make another 0.5pp of progress lower in 2024 but is still expected to be at 2.8%, which remains a concern. The Federal Reserve’s target is for inflation to stall at 2%.
Immediately after the election, the Federal Reserve cut interest rates by a quarter point, and have signaled intent to continue to cut rates next year, though they remain cautious. Jerome Powell, Federal Reserve Chairman, told CNN that the outcome of the election “will have no effects on our policy decisions.”
Cutting interest rates too much, too soon could make inflation worse. One of Trump’s key campaign promises was to eliminate inflation over his term, though some of his other promises may make that difficult. While he can influence the Federal Reserve’s monetary policy, it’s ultimately their call. Businesses should keep an eye on both the Federal Reserve and Trump’s proposed tariffs, deregulation efforts, and potential deportation that may make inflation worse in the short-term.
4. Industry Winners and Losers
A cornerstone of Republican policy is deregulation. That remains a top priority for the incoming Trump administration and many Republican members of Congress. “The return of Trump’s economic policies signals deregulation that can spur short-term growth, evident in the stock market rally. Industries such as finance, real estate, and energy will likely benefit from looser regulations and reduced oversight,” says Hughes.
Trump picked Liberty Energy CEO Chris Write as Secretary of Energy, who has been a big proponent of energy independence. We may see a reversal on Biden’s push for green energy, with tax breaks and grants for solar, wind, and electric motor vehicles. On the flip side, deregulation opens up more room for oil and gas companies to pursue fracking, pipelines, and drilling that were previously blocked.
“Energy companies will find fertile ground under relaxed regulations and expanded drilling allowances. CEOs should assess how these shifts can unlock new production capabilities while considering environmental and logistical challenges,” says Hughes.
The energy sector has long been a bellwether for the U.S. economy as a whole. More oil and gas projects like these may dramatically increase the global supply, increasing stock prices and driving down the price for consumers, which impacts consumer spending in other categories.
One area of uncertainty remains with Trump’s immigration campaign promises. If mass deportation and sealing the border do come to fruition, we may see issues with labor supply, particularly in the agricultural sector. “The agricultural sector should prepare for labor shortages if mass deportation plans gain traction, given that half of America’s farm workers lack legal status,” says Hughes. “CEOs need to develop strategies for automation or sourcing alternative labor solutions until we know what this looks like.”
5. Optimism for Business-Led Growth
Despite plenty of uncertainty about how Trump’s policies will change the global economy, our experts remained positive. Both agreed that CEOs need to be ready for change. “I don’t think we’ve ever had an administration coming in that is saying, please tell me what we can get rid of that makes your life better,” says Buchanan.
Trump’s proposed policy changes are intended to help businesses grow—whether your business takes advantage of those policies is up to you. Adds Hughes, “The stock market’s positive response reflects optimism about corporate tax cuts and deregulation. Business leaders should interpret this as an opportunity.”
The best way to Make BIG Happen with a lot of uncertainty in the market? With a little help from one of our expert coaches. They’ve led successful companies through the last six administrations. Whether you need someone to help sort through how trade policy will impact your business or want to encourage a more agile, innovative culture for your organization, our coaches are here to help. Schedule a no-cost call today >
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CEO Coaching International works with CEOs and their leadership teams to achieve extraordinary results quarter after quarter, year after year. Known globally for its success in coaching growth-focused entrepreneurs to meaningful exits, CEO Coaching International has coached more than 1,000 CEOs and entrepreneurs in more than 60 countries and 45 industries. The coaches at CEO Coaching International are former CEOs, presidents, or executives who have made BIG happen. The firm’s coaches have led double-digit sales and profit growth in businesses ranging in size from startups to over $10 billion, and many are founders that have led their companies through successful eight, nine, and ten-figure exits. Companies working with CEO Coaching International for two years or more have experienced an average EBITDA CAGR of 53.5% during their time as a client, more than three times the U.S. average, and a revenue CAGR of 26.2%, nearly twice the U.S. average.
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