Love him or loathe him, Donald Trump will have been formally appointed as Republican President of the US on 20th January on the back of a landslide victory over the Democrats. What will the impact of his widely-announced policy changes mean for Guernsey and our economy – particularly our International Finance focus? There are two very specific indications that he has so far given us including one that has yet to be fully fleshed out – Tariffs, (although very recently he has announced substantial tariffs on Canada, Mexico and China). The one area that we do know about is his approach to Net Zero and Sustainability – both of which currently feature in our Guernsey Finance offer.
we had better watch this space
Trump of course is running true to his beliefs over energy which saw him take the US out of the Paris Agreement in his first term – and is saying the same again for this term. And whilst the Biden administration embraced the ‘Green Deal’ and threw billions of dollars at it under his Inflation Reduction Act (IRA) – given that the US is now the leading country on energy exports and how cheap it makes it for them to be able to compete across the globe, Trump has no need to constrain the US to expensive Renewables. This presents a competitive problem for the EU and the Labour Government’s commitment to a similar Green future. The corollary to this is Trump’s preference for NATO countries to commit much more to defence and with all of the NATO countries in considerable economic difficulty already – where is the money going to come from – their massive commitments to the green ‘transition’ perhaps?
With Guernsey’s considerable reliance upon London markets and business in the EU could we find ourselves scrambling to re-align? There are other worrying developments such as a recent Oxfam report suggesting as much as £31 billion may have gone ‘missing’ from the World Bank’s green fund. Cop 29 ended up with no real progress on providing a guarantee of those donor funds to developing countries either. In addition, some very high profile financial institutions have exited the ‘Net Zero Banking Alliance’ very recently including Goldman Sachs, Wells Fargo, Citi, Bank of America and Morgan Stanley – putting question marks over the commitment to ESG policies. In addition, Blackrock (the World’s largest Asset Manager), is abandoning the Net Zero Asset Managers Initiative claiming that membership had ’caused confusion regarding Blackrock’s practices and subjected us to legal inquiries from various public officials’. They have $11.5 trillion under management.
Guernsey Finance’s own local survey found a diminishing appetite for Sustainability amongst industry clients as they increasingly return to seeking value over ethical investments.
What of Trump’s threats about Tariffs? Well, presently, it would seem that is likely to be limited to Goods in particular, but whether Services will be included is not yet clear – and from our perspective, especially Financial Services. For the time being, we had better watch this space, but Guernsey Finance may need additional Government support to embrace further market opportunities than the recent focus purely on Green Investing and Sustainability.
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