Post-Election 2024: US Companies coming to Europe
As the 2024 US presidential election results settle in, businesses are closely analyzing their implications for international growth. Understanding the potential shifts in policies is crucial for US companies with their eyes on European expansion. Here’s what to consider:
Trade and Economic Policies
Changes in administration may lead to shifts in trade agreements, tariffs, or economic partnerships that directly affect cross-border operations. The potential for new tariffs or trade barriers poses a significant consideration for companies planning to expand. According to the European Commission, the EU’s countermeasures could include imposing tariffs, restrictions on trade in services and intellectual property rights, and limiting access to foreign direct investment and public procurement. Additionally, Germany and the EU could seek to strengthen cooperation with individual U.S. states as a strategic response
EU's Potential Responses
US companies should be prepared for a more complex and potentially costly trade environment if tariffs cannot be avoided. The EU has outlined measures that could impact the overall ease of conducting business, necessitating strategic adjustments by US firms.
ACI (Anti-Coercion Instrument)
One of the solutions may be a new tool that the EU introduced to withstand economic coercion, called ACI (Anti-Coercion Instrument) providing the EU with the means to deter and respond to economic coercion, and thereby better defend its interests and those of its Member States on the global stage.
Mitigation
On the other hand, if these tariffs can be mitigated, European policymakers may negotiate with the incoming Republican administration by boosting select American imports in exchange for exemptions from tariffs. This approach could create opportunities for smoother entry and operations in the European market. Andrew Kenningham, chief Europe economist at Capital Economics said “This may include LNG (liquefied natural gas) and soybeans, both of which were part of a deal between Donald Trump and then-president of the European Commission, Jean-Claude Juncker in July 2018”.
Changes in Regulation in the EU
New leadership could impact regulatory alignment with European Union standards, influencing market entry strategies. Companies should assess how shifting policies might align or diverge from EU regulations, affecting compliance and operational procedures.
Currency Fluctuations
Elections often affect the US dollar's strength, altering the financial calculus for US businesses investing abroad. Companies should consider financial strategies that buffer against potential currency volatility to maintain profitability.
Bilateral Relations
The political climate post-election shapes relationships with European nations, impacting trust and cooperation levels. Strong bilateral relations can ease market entry, while tensions may increase operational hurdles. But being unprepared and facing unexpected changes is the hardest of all.Know this: Your business can thrive with the right preparation. We can help you achieve that and be ready to conquer the vast European lands.
What are your key considerations as we move forward? Let’s discuss it!
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