More tariffs, less red tape: what Trump will mean for key global industries

Donald Trump’s victory in the US presidential election left investors and business leaders across the globe scrambling to assess what his return to the White House will mean.

Stock markets, the dollar and bitcoin rallied in the immediate aftermath of his win, while shares in defence companies, prison operators and Elon Musk’s Tesla rose sharply. Meanwhile, renewable energy companies’ and German carmakers’ stocks fell. Here, we study the outlook for key industries.

Manufacturing and cars

Global manufacturers are firmly in Trump’s sights. Threatened 10% tariffs on all goods imports – and up to 60% and 100% for China and Mexico respectively – would inevitably be passed on to US buyers, raising prices and depressing import volumes.

Pharmaceutical, automotive, and chemicals are the most exposed industries because they represent the lion’s share of European exports to the US, according to Morningstar DBRS, a credit rating agency. The share prices of European carmakers including BMW and Mercedes-Benz dropped steeply on Wednesday.

Vaccine makers around the world such as Pfizer, BioNTech and GSK will be watching Trump’s appointments closely, after the president-elect indicated he will discuss policy with antivax ally Robert F Kennedy Jr.

In the longer term, more international manufacturers may try to get inside the protectionist wall, by building US factories. Volkswagen’s Audi and Porsche subsidiaries could be particularly vulnerable because they lack American factories.

“I want German car companies to become American car companies,” Trump said at a rally last month. “I want them to build their plants here.”

Technology

Tech is a key industry for the US economy and Trump has already signalled support for the cryptocurrency sector.

He has gone so far as to give a keynote speech at the annual Bitcoin Conference in Nashville where he pledged to “ensure that the US will be the crypto capital of the planet”. He went on to promise that he will fire Gary Gensler, the crypto-sceptic head of the US financial regulator the Securities and Exchange Commission.

Trump has also indicated that oversight of artificial intelligence, which has been the focus of a multi-billion dollar investment boom, will be relaxed. There is also widespread expectation that Lina Khan, the head of the Federal Trade Commission and a champion of a tough approach to the big tech firms, will be replaced.

But the ever-mercurial Trump has also voiced hostility towards important players, for instance saying he would “do something” about Google’s power, and threatening Meta’s Mark Zuckerberg with jail. TikTok, previously in Trump’s crosshairs, could be saved from a forced sale, however, with Trump pledging to “save” an app he had tried to ban during his first presidency.

Elon Musk will certainly be in Trump’s favour. The Tesla CEO and owner of X – as well as SpaceX, Neuralink and xAI – is a “star”, according to Trump.

Energy

Trump stormed to power with the promise to hand Americans the “lowest cost of energy of any industrial country anywhere on Earth”.

His plan includes wringing as much oil and gas from the US as possible by removing red tape and opening up federal land for new fracking projects. The impact is likely to be more marginal than environmentalists fear, according to analysts.

But his plan to bring Joe Biden’s burgeoning green economy to heel has already wiped billions from the market value of big European renewables developers.

Trump’s election triumph slashed €17bn from Denmark’s wind power giant Ørsted after its shares slumped by 11% on the Copenhagen Stock Exchange.

Vestas, a Danish wind turbine developer, lost 10% of its market value and is now worth €137bn. Shares in Spain’s Iberdrola, a leading renewables developer and the owner of Scottish Power, slipped by 4% to shave over €3.4bn from its shares.

Experts believe it is possible, but unlikely, that Trump would repeal Biden’s Inflation Reduction Act, which stands to inject about $433bn in grants, loans and tax incentives to healthcare, utilities and clean-energy companies and benefit many of the “red states” which helped him to power.

Aerospace and defence

Commercial aerospace companies could also be caught up in tariffs. Airbus, the world’s largest planemaker, has already said it will pass them on to airline customers – as it did with tariffs imposed in 2020.

Robert Stallard, an analyst at Vertical Research Partners, said the US planemaker Boeing would also be vulnerable if tit-for-tat tariffs take their toll. “Whatever occurs, tariffs on new aircraft are very likely to mean higher airline ticket prices,” he said.

The prospects for weapons manufacturers will depend on Trump’s foreign policy positions. With an isolationist White House, the EU may feel that it should increase defence spending. That could eventually benefit European arms makers like the UK’s BAE Systems and Germany’s Rheinmetall.

For the big US defence companies such as Lockheed Martin, RTX and Northrup Grumman, Trump’s pledge to “strengthen and modernise” the military with US kit could mean increased orders. On the other hand, his pledge to “stop wars” could imply a smaller military in the future – if he follows through.

Food and freight

The immediate aftermath of Trump’s win gave an insight into what his trade policies could mean for the food and farming industry: Chicago’s soya bean futures fell by almost 2% while wheat and corn prices also dropped, largely due to fears over a new trade war with China.

During the last Trump administration soya bean farmers in the US, which relies on the Chinese market, were hit by retaliatory tariffs that cut demand, and saw supply shift to Brazil and Argentina.

The EU’s food and wine industry could face challenges too. In 2019 European cheese and wine was hit with tit-for-tat tariffs after a disagreement over the EU paying subsidies to aerospace giant Airbus.

Domestically, Trump plans to halt legislation to ban price gouging by large food corporations, suggesting that his economic policies would bring prices down.

The global shipping industry is worried fresh trade wars under Trump could see a new spike in container prices. The ocean freight intelligence platform Xeneta warned that shipping container rates grew by 70% during the last Trump administration.

The Red Sea crisis has already seen traders face huge price hikes, with fourfold increases compared with last year in some cases.