Scottish exporters circumspect on Trump tariffs, by Nick Freer

There is that saying that when America sneezes, the world catches a cold.  These words came back to me this week as I had to miss a US presidential election results briefing run by the Scottish North American Business Council (SNABC) due to being under the weather.  

Hosted by Burness Paull, supported by Delta Airlines and international tax specialists USTAXFS, I was keen to hear about takeaways from the event as I sat at home in front of the box watching CNN with a Lemsip, so was pleased to hear from SNABC’s executive director Allan Hogarth later in the day. 

Hogarth says that while SNABC looks forward to working with the incoming president, in so small part because of Trump's not insignificant investments in the country,”there is also a collective hope that the campaign threat of an imposition of tariffs on Scottish imports will not come to pass, as this will damage the prospects of exports to our biggest export market, while adding costs to our valued US customers".

Scottish Government statistics indicate the value of exports to the US totalled around £4 billion in 2023, representing approximately 11 per cent of Scotland’s total exports and up by 6.8 per cent on the previous year.

Catching up with William Dobbie, Managing Director of R&B Distillers, owners of Isle of Raasay Distillery, William remarked: “The risk of any tariff being imposed on the industry is huge for a small distiller like ourselves.  In Trump’s previous term, the 25 per cent tariff was enacted at a time when the Scotch whisky market was more buoyant than it is today, so a new tariff from the largest value single malt market would be a massive challenge for growth.” 

Another popularised phrase comes to mind this week, “It’s the economy stupid”, coined by Bill Clinton adviser James Carville in 1992 as Clinton made a successful run for the White House.  Commentators agree that the perceived failings of the US economy by the electorate was the biggest knockout blow to the Harris ticket, particularly across the blue collar demographic in key swing states.  

In spite of his personality failings, a large proportion of US business leaders believe Trump to be the more pro business candidate, with a plan to cut taxes, remove red tape, translating to increased corporate earnings.  For Big Tech and Wall Street, there is an expectation that regulation will be significantly eased.  Many of the so-called ‘tech and finance bros’ will be raising a glass to the Chief MAGA Officer in upmarket bars this weekend.

Helpfully for Trump, he actually inherits a relatively strong economy - on Wednesday the Bureau of Economic Analysis reported that gross domestic product grew at a seasonally adjusted annualised rate of 2.8 per cent.

In the immediate term, the US dollar and stocks are viewed as winners, while market commentators are more circumspect about how a Republican presidency will impact bonds, emerging markets, trade policy, clean energy, and sustainable investing.  Snakes and ladders, anyone?

Having grown up in a university campus town in the US Midwest, I still feel a close affinity to the States and, as an agency, we’ve advised corporations from New York to Silicon Valley.  Irrespective of our connections to Uncle Sam, undoubtedly the United States of America will continue to have an outsized impact on all of our lives.