As I have traveled back and forth to the UK over the last several months the amount which people want to talk about the US elections has grown and grown.  Everyone can read the opinion polls themselves, and a lot can still happen between now and November 5th but it looks like the outcome is going to be very close; in the end this will be decided by a handful of voters in maybe six states.

Cutting through all the noise of Donald Trump’s legal challenges, student protests, Ukraine aid and Congressional infighting, it is important to think about the issues that everyday Americans are going to have in their mind over the next six months or so.  Top of the list, and no surprise, will be how people feel economically and therefore who they want to thank or blame.  Well paid executives are less likely to notice, but inflation in things like food, fuel, household and car insurance and leisure travel is squeezing household budgets and will be a crucial factor for that small group that hasn’t yet made up its mind, along with immigration, law and order and reproductive rights.

At BAB, with no political affiliations, we will be thinking about the implications of these elections for our members.  International trade and investment issues, though unlikely to have much impact on voting intentions, are important for our community.  Our sense is that a win for either candidate will see a continuation of America-first thinking, potential escalations of trade disputes (especially with China) and incentives for local investment. The two trade disputes affecting UK companies, the section 232 national security tariffs on steel and aluminum and the section 301 tariffs associated with the Boeing Airbus subsidy dispute were both suspended (not resolved) early in the Biden administration and there is a clear risk of these re-emerging.  Indeed, organizations close to Trump have talked about a mandated 10% tariff on all goods entering the USA and a focus on reciprocity around tariffs. As we have noted many times, the US has amongst the lowest tariff rates in the world, often lower than most countries that it trades with and with which it has a trade deficit, and this will be an itch that a future Trump administration will want to scratch.

If trade policy will be variations on a theme, tax policy presents a likely clearer difference in approach.  The tax rates created in the 2017 Tax Cuts and Jobs Act are due to expire at the end of 2025 and the candidates have opposing approaches.  President Biden has committed to allowing these tax cuts to expire, potentially moving Corporation Tax back up to 35% from today’s 21% (28% is also possible) as well as increasing personal income tax rates for higher earners; the Trump team is committed to maintaining current rates.  Everyone will have their own view on this issue of course, but for companies, such a difference in approach is material.

Beyond the obsession with the elections, BAB is active on a whole range of issues with and for our members.  Since my last Newsletter, we have convened members to discuss progress on the trilateral defense pact, AUKUS, the financing of next generation civil nuclear power with the Chair of the US EXIM bank, the prospects for an energy security and transition partnership between the US and UK, the effectiveness of the new UK US Data Bridge and multiple events on the regulation and application of AI.  We have produced a full report on the UK’s trade promotion agreements with individual US States and hosted numerous networking opportunities for our members in New York, London, Washington and, most recently, in Houston.  The months leading into the summer break will be just as busy; we will publish a full review of progress on the Atlantic Declaration in June, as well as our annual survey into Transatlantic business Confidence with our partner, Bain & Company.

And on May 16th, at our Transatlantic Business Awards, we are privileged to be honoring Sir Peter Westmacott, former Ambassador to the USA, Sue Wagner, co-founder and Director of BlackRock and James Gorman, Executive Chairman of Morgan Stanley.  Our Honorees have been supported by a stellar line up of businesses who will make it an absolutely brilliant evening and I would like to thank everyone in advance for their help with this most important event in the BAB calendar.

With all good wishes
Duncan