The election of the 47th President of the United States will have ramifications for the global economy.
The outcome of the vote will impact future investment in Ireland too, no matter who takes up office in the White House.
It has undoubtedly been a subject of much discussion in boardrooms across the US, and Ireland, as companies prepare for either a Trump or Harris presidency.
Ireland and the United States have a trade and investment relationship of more than $1 trillion. Not only is the United States the single biggest investor in Ireland, but Ireland is now the seventh largest investor into the United States.
With days to go before Americans go to the polls, Petula Martyn assesses the potential effects on the business landscape here.
Irish business leaders are predictably diplomatic when asked who their preferred candidate is in the US presidential election.
“Whatever the democratic outcome decided by the American people, businesses will be ready to work with the new Administration,” said Danny McCoy, CEO of Ibec.
“Outside of the EU, Ireland’s top trade and investment partner is the USA, with the USA accounting for 30.3% of Irish goods exports and 15.5% of Irish goods imports.”
Paul Sweetman, chief executive of the American Chamber, had a similar position.
“As a non-partisan organisation, AmCham will work with the next administration to support growth of the two-way business relationship between Ireland and the US,” he said.
Ireland is currently the 7th largest source of FDI into the US, with Ireland also being an international home to a significant number of US multinationals.
Mr Sweetman said over the past eight years, AmCham has engaged with the administrations of both President Trump and President Biden.
“During this time, Irish investment in the US and US investment in Ireland has grown strongly,” he added.
While the responses are predictable, predictability is the real preference of markets, economies, and businesses. It is difficult to do business in a climate of uncertainty.
Or as Mr McCoy puts it: “Ibec and Irish businesses will continue to advocate for an open, rules-based, and positive relationship with the USA at both national and EU levels – one that minimise trade tensions, reduces business costs, and fosters enterprise and innovation.”
Whoever is in power in the US, there is likely to be a big drive to bring investment home, with subsidies for American companies.
Ireland will feel its effects, along with the inflationary consequences of American economic nationalism.
Corporate Tax
Changes to the US corporate tax rates and global tax reforms will likely be influenced by the election result.
If she wins the White House, Democrat candidate Kamala Harris plans to increase the US corporate tax rate to 28%, up from 21%, sticking by a move proposed by President Joe Biden.
It would make the US corporate tax rate one of the highest among advanced economies.
While the proposed increase would raise government revenue from corporate America, it has already drawn criticism from business in the US.
In sharp contrast, Republican candidate Donald Trump proposes cutting the corporate tax rate to 15%, which is the same rate that large US multinationals pay in Ireland since its introduction this year.
In Ireland, corporate tax receipts have surged in recent years. They are the stand-out feature in the tax performance, with receipts well ahead of expectations to date this year, but they are regarded as a highly volatile revenue stream.
Corporate tax receipts are heavily concentrated in foreign firms, many of them US multinationals.
“Irish businesses must stay agile and informed about potential changes, as US tax policies and global trade dynamics could shift depending on who takes office,” said Daryl Hanberry, Partner and Head of Tax & Legal, Deloitte.
“Ireland is a small, open economy and foreign multinationals play a vital role. Though they make up just 3.2% of all businesses in Ireland, foreign multinationals generated a remarkable €920.6 billion in turnover, employing over 623,000 people in Ireland in 2022.”
While many foreign companies have operations here for decades, and have established connections with the labour market and suppliers, FDI remains intrinsically mobile.
There is no suggestion that a US corporate tax rate of 15% would lead to an exodus of US multinationals from Ireland, however, if the tax advantage for Ireland disappeared, it could likely influence future investment decisions in sectors that are important to Ireland.
This week, Kerry Group CEO, Edmond Scanlon, was asked if any post-election cut to US corporate tax rates to levels closer or lower than Ireland might prompt the company to move its domicile, he said the company “wouldn’t be making any rash decisions on moving anywhere”.
Tariffs
In 2018, then US President Donald Trump tweeted, “trade wars are good, and easy to win”.
It came a day after he announced steep tariffs on imports of steel and aluminum to protect US producers.
“When a country is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win,” Trump tweeted.
“Example, when we are down $100 billion with a certain country and they get cute, don’t trade anymore-we win big. It’s easy!”
At the time, fears of an escalating trade war triggered selloffs on Wall Street and in Asia and Europe, hitting the share prices of steelmakers and manufacturers supplying US markets hard.
If he regains the presidency, Trump has promised a much more aggressive form of protectionism.
Trump has said he will impose massive tariffs on trade from China of up to 60% which would inevitably lead to a trade war between the world’s two biggest economies, affecting the global economy.
He has also said he will impose tariffs of 10% on goods coming from all other countries, including Ireland.
That will be an issue for Irish exporters to the US, including the pharma sector which is a massive exporter from Ireland to the US market.
Is this just rhetoric or will it be a reality under a Trump administration? He threatened similar tariffs before, particularly on pharma in Ireland, but it never happened.
The EU is not taking any risks, however, with reports in the Financial Times that the EU is going to go to the Trump administration if he is elected, and advise that the bloc will be happy to work with the US to get more American exports into Europe, to increase sales and reduce the trade deficit, if the president is prepared to hold off on putting tariffs on American products.
Trump could view that as a victory, and it would be hugely beneficial to Ireland.
During the televised debate in September, Harris responded to Trump’s tariffs proposal, saying tariffs are effectively a “sales tax” on American households.
However, the Biden administration imposed its own set of tariffs, while also extending ones levied during the Trump administration.
The Democratic nominee has not explicitly stated whether she would extend them, but her campaign website says she said she would continue to “support American leadership in semiconductors, clean energy, AI, and other cutting edge industries of the future,” while addressing “unfair trade practices from China or any competitor that undermines American workers.”
Trump trade
The so-called Trump trade puts forward the theory that certain industries and financial assets, such as oil drillers and cryptocurrencies, would benefit should the former president regain the White House.
There are signs in the markets that the Trump trade is gaining traction, though it is hard to separate cause from effect.
Shares in Trump Media & Technology Group have soared since the end of September.
The social media company, which has been unprofitable to date, has added nearly $2 billion to its market value.
It’s unclear, however, whether the group would attract more advertisers if Trump is elected the next president.
Analysts also point to a recent rally in bank stocks, but banks have reported earnings that were better than expected so that could account for the increases.
A Trump administration would also be viewed as being friendlier to digital assets, though Vice President Kamala Harris has made appeals to the industry.
Bitcoin has risen about 13% in the past week, as it bets on a second Trump administration.
And even though the Republican nominee, would like a weak dollar, it has neared a two-and-a-half month high as currency traders appear to be pricing in a Trump victory.
Some traders are betting that his economic policies would drive up inflation, lower bond prices and strengthen the dollar.
Investors caution linking the investment moves to Trump because many moves could be caused by rising economic optimism following a recent upbeat US jobs report, which the Biden administration could take credit for; an administration whose vice president is Kamala Harris.
Tourism
Could the outcome of the US presidential affect US visitor numbers to Ireland?
No, according to Eoghan O’Mara Walsh, CEO of the Irish Tourism Industry Confederation.
“There is an urban myth that the outcome of the US election always impacts on Irish tourism numbers. We looked back over the last three decades, and in fact, tourism numbers rose the year after an election. The only exception was the year after Barack Obama’s election in 2008 and that was because of the financial crash.”
Mr O’Mara Walsh said the main thing that affects tourism numbers into Ireland is the air access across the Atlantic.
“Thankfully that’s in a very strong position and we expect it to remain in a strong position next year,” he said.
However, he added that every sector needs stability, security and economic growth, and “one candidate seems to provide a more stable footing than the other.”
“If there was a Trump mark 2 presidency, his erratic behaviour and perhaps trade tariffs and all the other things he’s threatening, perhaps that could dent confidence,” he said.
Shannon Airport is seeing greater numbers of US visitors because improved air access.
US passenger numbers are up 14% (34,000) on 2023 so far this year, thanks in part to the return of Delta Airlines on the New York-JFK route in May.
The airport has welcomed US presidents throughout the decades, from Kennedy to Trump – the latter en route to his resort, Trump International Golf Links & Hotel Ireland.
On expected US passenger numbers around election day, November 5, a spokesperson for the airport said it is not expected to have a material impact on passenger numbers.
Domestic travel in the US will be affected. Delta Air Lines expects a 1% hit to its revenue this quarter as people avoid traveling in the two weeks around election day, staying home to vote instead.
United Airlines said it also expects passenger numbers to dip in the days around the election.