Are you ready for round two? What we know about Trump’s second term so far

“The biggest risk to the economy is if Trump follows through on his campaign promises,” said economist Jason Furman, in an op-ed for Le Monde, in the immediate wake of Trump’s election victory on 6 November.

On 20 January 2025, Donald Trump will be inaugurated as the 47th U.S. president, and the first to serve non-consecutive terms since Grover Cleveland in 1884 and 1892.

A widespread conversation before his victory was about how Trump’s return would impact global economies and risk management worldwide.

“One might argue that a further Trump presidency is the greatest threat we face to innovation and global stability,” said Airmic CEO Julia Graham, when discussing the top threats facing UK risk professionals in 2024 back in March.

The US president significantly influences international trade, financial markets and geopolitical dynamics. Trump’s decisions over the coming years could lead to shi s in trade policies and economic strategies, affecting supply chains and market stability.

Changes in US foreign policy can also influence security risks and diplomatic relations worldwide. So, what exactly does his return mean for global risk managers?

LOOKING BACK: AN AGGRESSIVE FIRST TERM

Perhaps a good place to start considering what a second Trump term will look like is to review his first spell in the Oval Office.

Trump’s first term was marked by significant policy shifts and a unique approach to leadership that reshaped both domestic and international landscapes.

His administration adopted an ‘America First’ stance, prioritising US interests in trade, immigration and foreign relations. This approach often resulted in confrontational rhetoric, particularly towards long-standing allies and international organisations.

One of the hallmark features of Trump’s presidency was his aggressive stance on trade. He imposed tariffs on a wide range of goods, particularly targeting China, which he accused of unfair trade practices. This led to a tit-for-tat trade war, resulting in increased costs for American consumers and businesses reliant on imported goods.

While Trump argued that these measures were necessary to protect American jobs, the long-term consequences of such policies raised concerns about supply chain disruptions and inflationary pressures.

“One of the hallmark features of Trump’s presidency was his aggressive stance on trade.”

Trump’s administration also focused on deregulation, aiming to reduce the burden of federal regulations on businesses. This was particularly evident in the energy sector, where he rolled back environmental protections to promote fossil fuel production.

Proponents argued that these measures spurred economic growth and job creation, while critics pointed to the potential environmental risks and long-term sustainability concerns.

On the global stage, Trump’s approach to diplomacy was often unorthodox. He sought to forge personal relationships with authoritarian leaders, including North Korea’s Kim Jong Un and Russia’s Vladimir Putin, while expressing scepticism towards traditional alliances like NATO.

His withdrawal from the Paris Agreement and the Iran nuclear deal underscored his willingness to abandon multilateral agreements, raising questions about the future of international co-operation.

THIS TIME AROUND: UNCERTAINTY, VOLATILITY

So, what can global risk managers expect this time? In the weeks since his election, there have already been several key indicators.

Trump’s election win fuelled an immediate stock market surge. US stock markets the Dow, S&P 500 and Nasdaq all hit record levels. This was largely based on Trump’s promises of tax cuts and tariffs, boosting the dollar and creating a sell-off in US government bonds.

His promises of corporate tax cuts and deregulation also agitated market activity. However, these are early days, and Trump is yet to actually return to office. Trump’s first term was characterised by significant economic fluctuations, and his return could trigger similar instability.

His unorthodox approach to governance, particularly regarding economic policy, raises questions about the stability of financial markets.

During his presidency, Trump frequently employed social media to announce policy changes or intentions, often leading to immediate market reactions. Investors, wary of his unpredictable style, may experience heightened anxiety, resulting in market volatility.

Moreover, Trump’s stance on international trade could further complicate matters. His administration’s emphasis on ‘America First’ principles often translated into tariffs and trade barriers. When he returns to office, businesses must brace for a potential resurgence of protectionist policies that could disrupt global supply chains and alter market dynamics.

“The ripple effects of Trump’s tariff ambitions will leave risk managers, especially those with global operations, much to consider.”

One of the defining characteristics of this election cycle, and most of the most repeated concepts by Trump, was the notion of tariffs. Trump believes that imposing tariffs on trading partners will help protect US businesses, convince foreign manufacturers to open plants in the US and deliver billions in new federal revenue.

On 26 November he announced on his Truth Social site that he would place a 25% tariff on all imports from Mexico and Canada on January 20, his inauguration day. He also said: “We will be charging China an additional 10% tariff, above any additional tariffs.”

The ripple effects of Trump’s tariff ambitions will leave risk managers, especially those with global operations, much to consider.

The tariffs will impact global supply chains, trade agreements and pricing structures. For companies reliant on cross-border manufacturing, particularly in industries like automotive, technology and agriculture, these policies could mean higher costs, operational disruption and compliance headaches.

Such tariffs also threaten to inflame geopolitical tensions and spark retaliatory measures, creating a more volatile environment for global trade and investment.

For example, Mexican president Claudia Sheinbaum has suggested that Mexico could retaliate with tariffs of its own on the US. “One tariff would be followed by another in response, and so on until we put at risk common businesses,” Sheinbaum said.

PREP FOR SUPPLY CHAIN DISRUPTION

In addition to these new tariffs, Trump’s policies have historically had a considerable impact on global supply chains, and his return could introduce new challenges for businesses reliant on international networks.

The threat of further trade restrictions may force companies to rethink their sourcing strategies, leading to increased costs and operational disruptions.

A report by the Economist Intelligence Unit, titled ‘Trump Risk Index: the global impact of a new US presidency,’ says on the topic of higher tariffs and trade restrictions: “We think that Mr Trump would follow through on his stated intention to impose a blanket tariff on US imports; he has proposed a 10% flat rate, although we believe that this would ultimately be watered down. Additional punitive measures on politically sensitive imports like steel would be likely.”

Risk managers should proactively evaluate their supply chains and consider diversifying their sources to mitigate risks associated with potential trade barriers. Engaging with local suppliers or exploring alternative markets may provide a buffer against uncertainties stemming from Trump’s policies.

Additionally, companies should stay informed about any legislative changes that may affect trade relations and supply chain dynamics.

BACK AGAIN, BUT MORE CLINICAL

In this election campaign, Trump cut a slightly more reflective, and often less aggressive, figure compared to his first election run.

However, this will be Trump’s last spell as a US president – at least based on current US policies, which rule that presidents can only serve two terms. This may embolden Trump to enact the most change possible before he steps down.

With both the House of Representatives and the Senate holding a Republican majority, Trump will have the power – for the next two years at least – to push much of his agenda.

In 2016, Trump won just shy of 63 million votes, less than Hillary Clinton’s nearly 67 million votes. In 2024, he won close to 77 million votes and became the first Republican candidate to take the popular vote in 20 years. Such a result may embolden Trump to believe he has a larger mandate than before to push his agenda.

“Wiles has almost no public profile, but is known for getting the job done”

His administration appointments so far have largely been Trump loyalists. However, certain nominations have hinted at a more strident approach to actual policy implementation.

During his first term, Trump went through four chiefs of staff – Reince Priebus, John Kelly, Mick Mulvaney and Mark Meadows. The appointments were a combination of attempted Republican appeasement and a scattergun approach, often ending on bad terms.

This time, one of his first appointments came just two days after his election win – Susan Summerall Wiles, his campaign manager. Described by US political magazine Politico as “the most feared and least known political operative in America,” Wiles has almost no public profile, but is known for getting the job done, adding to further speculation that Trump’s second term will be less soap opera, more enacting change.

For risk managers, this development is noteworthy as “potential risks” might be more potent or likely with Trump during his second term.

GEOPOLITICAL TENSIONS RISING

A second Trump term may also exacerbate existing geopolitical tensions. His confrontational approach to foreign policy, particularly regarding China and Russia, has the potential to reshape alliances and create friction between nations.

During his first term, Trump ften favoured unilateral actions over multilateral agreements, raising concerns about the future of international diplomacy.

Countries may need to recalibrate their foreign policies in anticipation of Trump’s return. And nations that have relied on the US for support in regional conflicts may find themselves navigating a more unpredictable landscape.

By way of example, on October 15, in an interview with the Economic Club of Chicago and Bloomberg News, Trump discussed South Korea. South Korea currently pays the US for the presence of about 28,500 American troops in the country — as a deterrent to North Korea and to be ready to deploy if war breaks out between North and South.

“On 26 November it was reported that Trump’s team was considering pursuing direct talks with North Korean leader Kim Jong Un”

Trump described South Korea as a “money machine” and said: “If I were there [in the White House] now, they’d be paying us $10bn a year. And you know what? They’d be happy to do it.”

Alongside this bullish rhetoric against South Korea — one of the US’s closest long-term global allies — on 26 November it was reported that Trump’s team was considering pursuing direct talks with North Korean leader Kim Jong Un. This is despite global concerns about human rights abuses and nuclear armament in North Korea, plus its recent support of Russia in its war in Ukraine.

Trump has previously met Kim three times and even once declared that the pair “fell in love” after exchanging letters. The overall implications for global security are significant, as allies and adversaries alike assess how to respond to a more isolationist and transactional US foreign policy.

EXPECT DEREGULATION

Trump’s first term saw significant deregulation across various industries, from environmental protections to financial oversight.

When he returns to the White House, businesses may need to brace for further regulatory rollbacks, which could create both opportunities and challenges.

While reduced regulations might spur growth for some industries, others may face heightened scrutiny or changes that could disrupt their operations.

Companies in the energy sector may benefit from less stringent environmental regulations, while those in healthcare may find themselves navigating a more chaotic regulatory environment.

Businesses should conduct thorough risk assessments to identify how potential regulatory changes could impact their operations, ensuring they remain adaptable to the evolving landscape.

PUBLIC SENTIMENT ON A KNIFE’S EDGE

Trump’s polarising presidency ignited significant social and political divisions across the US, and his return could amplify these tensions on a global scale.

Risk managers should recognise the potential for social unrest and the reputational risks associated with operating in a politically charged environment. 

Engaging in proactive communication strategies and fostering a culture of inclusivity can help organisations mitigate social risks. Companies should consider how their messaging aligns with public sentiment and be prepared to respond to emerging social movements. A failure to address these issues could lead to significant reputational damage and loss of consumer trust.

While many businesses are keenly aware of the potential risks associated with a Trump presidency, it is essential to acknowledge the unpredictable nature of politics.

His first term was marked by unexpected policy shifts and reactions that left many unprepared. Therefore, organisations should adopt a flexible risk management strategy that allows them to respond swiftly to changing circumstances.

Developing contingency plans and scenario analyses can help businesses navigate the uncertainty surrounding Trump’s return. By evaluating various outcomes and their implications, organisations can position themselves to respond effectively, minimising potential disruptions.