Donald Trump won the November 5 US presidential election, and his party, the Republicans, gained control of the Senate. They will likely win control of the House of Representatives.
The remaining election results will be called over the coming weeks and days. The next Congress will be inaugurated on January 3, 2025. President-elect Trump will be inaugurated on January 20.
Supply chain and operational risks must be prepared for, including tariffs, the impacts of global conflict escalation, changing ESG and broader regulatory policies, and more.
WHAT HAPPENED
Donald Trump won the November 5 US presidential election, and his party, the Republicans, gained control of the Senate. Republicans are also favored to win control of the House of Representatives.
Trump won the election after surpassing the 270 Electoral College votes.
At the time of writing, Trump has secured 277 Electoral College votes. Thirty-six votes across several states have yet to be awarded as votes in the states are still being counted. He is likely to win the remaining Electoral College votes.
Trump’s vote margins were stronger than expected after relatively weak turnout and stronger-than-expected performance across several demographic groups.
Republicans gained control of at least one chamber of Congress: the Senate. Control of the House of Representatives is still undetermined. However, Republicans are favored to win the House.
Republicans will hold at least 52 of 100 seats in the Senate. They will likely win two to three more seats.
At the time of writing, Republicans had won 203 of 435 seats in the House of Representatives. Democrats trail at 188. A majority in the chamber is 218 seats.
WHAT’S NEXT
The remaining election results will be called over the coming days and weeks. Congress will be inaugurated on January 3. The president-elect will be inaugurated on January 20.
Expect Trump’s cabinet to be announced over the coming weeks, and confirmation processes will start in January (but possibly earlier in December).
SUPPLY CHAIN RISKS
Trump’s victory will usher in potentially transformative changes for US-exposed supply chains. PRISM assesses five changes to prepare for:
Tariffs || Impact: Critical
Throughout the campaign, Trump backed significant tariff increases with US trading partners. The main targets of Trump’s tariff policies are China and Mexico.
Importantly, the tariffs proposed by Trump and his surrogates do not aim only to address trade imbalances and other areas of trade policy. They also seek to address broader policy issues between the United States and key trading partners (e.g., immigration, drug trafficking, etc.). This tariff approach was regularly used against trading partners during his first term.
Throughout his campaign, Trump proposed various approaches to tariffs with trading partners, providing few concrete and unchanging proposals. At a high level, his policies include:
Trump will seek to proceed with his proposed tariff policy, which includes 60% (“or higher”) tariffs on China and 20% (“or higher”) tariffs on other countries. Broadly, this will raise the cost structure for all US-exposed supply chains.
He will move quickly on these efforts, using presidential powers over national security to alter tariffs. Legal battles will likely ensue over his power to impose some tariffs. However, expect a significant increase in US tariff rates across the board over the next two years.
This, in turn, will drive retaliation from trade partners, leading to higher tariffs on imports to other countries from the US. It will also drive vast changes in supply chain locations. Trump has vowed to drive reshoring as the primary goal of the tariffs, even threatening the use of tariffs to ensure nearshoring to Mexico does not become a workaround for companies.
Specifically related to imports from Mexico, Trump proposed the following measures:
Tariffs of at least 25% on all Mexican imports (specifically aimed at pushing the Mexican government to take stronger action in addressing migration and drug trafficking).
Tariffs of 500% on automobiles made by Chinese firms operating in Mexico (seemingly regardless of the portion of goods produced in North America).
Tariffs on transshipments of Chinese goods that enter Mexico and are then re-exported to the US.
Tariffs would not be applied unidirectionally. Any action by the Trump administration would trigger impacted trading partners to respond with their retaliatory measures.
In most cases, trading partners would respond with tariffs on imports from the US. At first, tariffs would likely target politically sensitive US exports (e.g., wheat, soy, corn, bourbon, automotives and related parts, etc.). However, in cases where US tariffs on a trading partner are particularly expansive, a far more comprehensive range of goods could be targeted.
Additionally, US trading partners hit with tariffs could target sectors the US is working to develop through stimulus measures, making it harder for those sensitive industries to establish without further US government support. Today, those industries could include semiconductors, clean energy technologies, and critical minerals).
Beyond tariffs, China commonly employs non-tariff measures (e.g., export and import controls, boycotts, etc.) of goods to reduce imports from its trading partners when tariffs are imposed on them. These typically also target politically sensitive goods.
Economy || Impact: High
Trump’s policies risk reigniting inflation. US inflation is slightly above the Federal Reserve’s (US central bank) 2% target.
Trump’s proposed tariff policies, stimulus measures (e.g., tax cuts and deficit spending), and mass deportation policies (primarily targeting millions of low-wage workers) would contribute to higher inflation.
Supply chain planners should plan for the risk of elevated pricing from the US.
Global conflicts || Impact: Moderate
Trump vowed to end the war in Ukraine “on day one” and suggested he could loosen sanctions on Russia following the war’s conclusion. The war is only likely to end if military aid to Ukraine is halted by the Trump administration, forcing Ukraine’s government to negotiate with Russia – talks that would heavily favor Russia and likely result in the ceding of territory to Russia.
Such an outcome would likely see the US ease its sanctions on Russia while the EU and other G7 countries’ sanctions on Russia may tighten.
Additionally, conflict risk globally will rise. This includes conflicts between Russia and its neighbors (e.g., Poland) and other regions (e.g., Taiwan, as Russia’s “success” in the war could pave the way for more aggressive action by China).
Trump will likely also boost support for Israel in its ongoing conflicts with Iran and its regional proxies (i.e., Hamas, Hezbollah, the Houthis, etc.).
Such policies would raise the risk of escalation with Iran.
ESG || Impact: Moderate
The Trump administration will likely roll back the Biden administration’s sustainability policies. This may include ending federal regulatory interventions (e.g., the Security and Exchange Commission’s climate disclosures, which are already under legal challenge), oil and gas drilling restrictions, emissions rules, and land-use provisions.
The Trump administration may also pursue new laws and regulations targeting diversity, equity, and inclusion (DEI) policies and repeal portions of the Inflation Reduction Act (although these would depend on the margins by which Republicans control both chambers of Congress).
The incoming Trump administration will also increase the risk of human rights violations globally. Like during Trump’s first term, the US government will apply less pressure on foreign governments to uphold human rights and more broadly reduce engagement with foreign authoritarian governments.
This raises the need for significant due diligence capabilities for suppliers in emerging markets, especially for companies subject to compliance requirements like in the EU.
Trump’s victory may also invigorate populist movements outside the US, including political groups that want to roll back ESG regulations (e.g., in Germany and Canada, where elections will occur in 2025).
Finally, the Trump administration will significantly reduce government investigations and interventions targeting the private sector in all areas of ESG, including enforcement of labor protections, environmental regulations, and other policy areas.
Other policy areas || Impact: Moderate
Other areas of the economy are likely to see policy changes as well. However, the specific policy proposals are not as clear yet.
In the tech sector, significant changes in the US government’s policy agenda are possible. Notably, the Biden administration’s antitrust agenda is likely to end.
Financial services are likely to see more deregulation.
More broadly, efforts to reduce federal spending and regulatory agency capacity will result in less regulation and enforcement of existing rules.
Reduced government enforcement of regulation generates risks, including compliance uncertainty, disruptions from reduced government capacity (e.g., in areas like permitting, policy consultations, etc.), and state governments becoming more forceful in regulating areas of policy concern (e.g., California regulating environmental policies and tech).
The potential for radical changes impacting specific industries is more uncertain, particularly if surrogates for the Trump campaign become administration officials. For example:
Robert F. Kennedy Jr promised to make substantive changes to the food and health sectors if given a role in the administration (e.g., as Secretary of Health and Human Services, regulators, etc.).
Elon Musk was proposed to lead a new government agency tasked with reducing government size and expenditures.
Disclaimer: The information contained in this report is for informational purposes. PRISM makes every effort to ensure this document is accurate and up to date but cannot guarantee the accuracy or completeness of the information. PRISM assumes no responsibility for any errors or omissions in the information. PRISM is not responsible for any losses or damages incurred from using the information in this report or on third-party services for which links are provided.