As the US is the largest economy globally, the economic policies of a US presidency play a crucial role in the dynamics of the global economy, influencing supply chains and affecting the remote work landscape worldwide. US presidents can use a range of policies that can either stimulate or hinder foreign, inbound or outbound trade, corporate investment and economic stability. Reactions to these policies vary around the globe, with allies and competitors choosing whether or not to adjust their strategies to navigate changes in trade agreements, tariffs and labour markets or to engage in negotiations on renewed trade agreements.
Global economic influence
The impacts of a US presidency on the global economy can’t be overestimated as policies related to taxation, trade and monetary policy often create ripple effects. For example, tax cuts and deregulation can drive US economic growth, encouraging foreign investment. Whereas protectionist policies, such as tariffs on imported goods, may trigger retaliatory measures, potentially leading to trade wars that disrupt global markets. Nations’ reactions depend on their economic ties with the US, meaning that reactions of the European Union, China and other nations may well be very different.
Supply chain dynamics
Supply chains, heavily reliant on international cooperation, are directly affected by the dynamics created by changing policies and the back and forth of responses by trade partners – just as they are by other events, such as conflicts, pandemics, etc. Such events may lead businesses to consider diversification of supply chains, as companies seek to reduce dependency on single markets and avoid disruptions caused by international policy changes. Given the impossibility of predicting the future, companies need to plan and have adequate agility to be able to react to different potential scenarios.
Workforce shifts
Equally, on the workforce front, the impact shouldn’t be underestimated. In a changing landscape, businesses may consider relocating (parts of) their business and production to mitigate measures, which could lead to a potential rebalancing of the global workforce. At the same time, the rise of remote work, accelerated by the COVID-19 pandemic, is and will continue to evolve in view of factors comprising said relocation considerations, as well as immigration policies impacting the availability of talent. Global reaction can be mixed; countries with favourable digital infrastructure will embrace this shift by offering digital nomad visas to attract skilled professionals. Meanwhile, others will have to adapt to evolving labour trends and changing regulations.
Sector-specific impacts
The changing political environment’s influence will also vary depending on industry sector. The defense sector jumps easily to mind, where contractors rely heavily on government budgets and military policies. A president’s stance on military spending and alliances directly impacts defense companies and global security markets. Another example is the technology sector, where changes in policies on antitrust regulations, data privacy and semiconductor production can have a significant influence.
In the coming months, we’ll organise a masterclass on the tax and people impact of a changing global environment against the backdrop of the current US Presidency, focusing on the potential impact on tariffs, supply chains, people, etc, followed by a deep dive into the possible impact for specific industry sectors. Details on these events to come soon.
Author
More news about
- Corporate income tax
- Customs & VAT
- International employment taxes
- International taxation
- Reward
- Transfer pricing
- VAT & Duties
