What could the result of the US election mean for Australian companies?

Theme 2 of 4: The demise of truth and trust

Donald Trump’s victory in the 2024 US election matters to businesses everywhere, including Australia. The Republican party’s clean sweep of the presidency, Senate, and House of Representatives portends big changes in both domestic and foreign policy. However, Trump’s government is not making policy in a vacuum. Trump and his team need to navigate an increasingly disrupted geopolitical environment characterised by rising competition and mistrust. This volatile context is driven by four megatrends which Trump’s presidency will not only need to navigate, but will also help shape: changes to the global power status quo,(see the first article in this series); the demise of truth and trust (this article); the race for tech advances (forthcoming article); and the climate crisis (forthcoming article).

In recent years, researchers have noted declining trust in governments and the public sector, and increasing political polarisation. At the heart of this is a feeling shared by many – especially working-class and rural populations – of having been betrayed by their leaders and left behind by globalisation. As people have lost trust, they have turned away from the political centre, blaming immigrants, foreigners, diversity initiatives and the ‘deep state’ – an alleged shadowy group of powerful bureaucrats and officials who wield power outside of legitimate leadership –for their challenges. This trend of mistrust and anger has been exacerbated by the increasingly siloed digital information environment and the growing proliferation of ‘alternative facts’ in social media, where many Americans go for their news. The result is a deeply polarised population in the US,?where many people are fed up with politics-as-usual and looking for an alternative.

Mr Trump presents himself as just the alternative they are looking for. Political observers have noted that President Trump appeals to the concerns of mistrustful and polarised citizens, which contributed to his electoral success in both 2016 and 2024.?For example, he has appealed to a sense of mistrust of foreigners by issuing executive orders to increase deportations of undocumented immigrants, arguing that illegal immigrants are committing crimes and threatening national security. President Trump has called to the sense of frustration and marginalisation of the working class by promising to protect American jobs by raising import tariffs. He has acted swiftly to dismantle diversity, equity, and inclusion initiatives across the public service, seen as unfairly benefitting certain groups rather than following a meritocratic approach. To tackle the perceived problem of the ‘deep state’, the Trump administration has attempted to drastically reduce the federal government workforce. All of these initiatives were key pledges of Mr Trump’s successful election campaign.

President Trump’s policies and initiatives to appeal to the mistrust of American voters do not only have implications for the US. Experts believe that many of Mr Trump’s policies have already and will continue to contribute to perpetuating the environment of declining trust well beyond US borders. This is due to the unrivalled cultural and economic power and influence that the US wields. As the US erects protectionist barriers to imports, the countries impacted are retaliating in a like fashion. This exacerbates the general global feeling that other countries are ‘ripping us off’. US efforts to curb undocumented immigration are prompting other governments to take similar measures, which also contributes to general mistrust of foreigners. ?Mr Trump’s decisions to withdraw the US from the Paris Climate accords and World Health Organisation – and his earlier decision to effectively paralyse the dispute resolution function of the World Trade Organisation – have greatly diminished the global standing of those institutions. The end result is an environment of ‘every country for itself‘, which means it is getting harder to achieve collaboration across borders to stimulate growth and solve shared problems.

There are several ways that these developments in US politics and their domestic and global implications affect Australia. Protectionist trade settings could negatively impact demand for Australian exports. At the same time, trade barriers in other countries could make imports of some goods into Australia cheaper. For example, US and EU barriers to Chinese electric vehicles have prompted Chinese exporters to offer discounted prices in other markets, including Australia. Many economists believe that increased deportations from the US could contribute to inflation and negatively impact growth in the American economy, which has implications for all Australian businesses with US commercial and investment links. Australia – and the rest of the world – also face broader risks from shared global challenges, including climate change and public health threats. Rising mistrust and competition in the global system, and a decline in support for key global institutions, threatens to make these risks more acute in the years ahead, and further complicate their management.

Australian businesses need to ensure that they are across these developments, and building in the tools they need to navigate risk, build resilience, and maximise opportunities.