As the result of the US election was all but confirmed, Mark Zuckerberg took to Threads to congratulate Donald Trump on his victory, saying: “We have great opportunities ahead of us as a country.”
Many in the global tech sector will view the election result as an opportunity. But with the mass exodus from X – and the confirmation of a role in Trump’s cabinet for its owner – it’s clear that there are significant challenges ahead for tech too.
The Musk effect
As well as having Elon Musk head up the ‘Department of Government Efficiency’, Trump has aligned himself to several tech initiatives driven by Musk – from aggressive deregulation of some of Biden’s AI legislation, to the appointment of pro-crypto figures to his cabinet.
On these points, the industry reaction has largely been warm – news of Trump’s victory was greeted with a boom in Bitcoin, for example. If there are opportunities for innovation following Trump’s victory, the early signs for workers – as well as potential investors – in the AI and crypto spaces are encouraging.
Whether less regulation is what’s needed to move these verticals forward, however, is another question entirely.
Many experts have warned of the need for greater controls to address AI discrimination, misinformation and existential risk – whereas with Trump, it looks like policy is set to move in the opposite direction.
On the one hand, the tech sector must be free to drive innovation – this has been a key driver of the US economy and the performance of the stock market. But on the other, consumer interests must have a degree of protection, and monopolies must be addressed to keep the market competitive.
Most importantly, any regulation on AI would benefit from a global framework to be effective. If the US goes ahead with deregulation, it will provide neither the necessary international safeguards for the technology, nor the necessary reassurances for investors.
“The most beautiful word”
Despite potential economic gains in AI and crypto, many of Trump’s other policies put him at odds with the global tech community and conventional economic wisdom.
Specifically, the proposal to deport between 10 and 15 million ‘illegal’ immigrants in the US is estimated to cost the economy as much as $968 billion in just over a decade.
The US is currently in the throes of a productivity crisis, facing critical shortages in the workforce. Of those millions of immigrants, around eight to nine million are employed in sectors that Americans either don’t want to work in, or which already lack workers.
Trump’s anti-immigrant policies are therefore at odds with a workforce that needs to recruit more individuals to power key services and drive economic growth – not remove them from the country. Workforce shortages will also add to inflationary pressures, and the Federal Reserve may look to hold interest rates intact or potential increase them.
Meanwhile, Trump’s promise to impose tariffs – which he infamously described as “one of the most beautiful words” during his campaign – on all imports could have potentially disastrous consequences for global supply chains and the cost of goods. He has indicated that a 25% tariff will be put on imports from Mexico and Canada, and an additional 10% on the tariffs already in place with China.
Such disruption will have a direct impact on UK firms with strong ties to the largest tech economy in the world. And with the risk of escalating trade tensions, a slowdown in investment and a disruption of cross-border collaboration – particularly in tech – seems likely.
Chipping away at the problem
Semiconductors are another area of strategic significance suddenly cast into doubt by the election result.
There are growing concerns that Trump may decide against renewing the CHIPS Act, a Biden-era $50bn policy to encourage American companies to build domestic chip manufacturing plants.
If the US is to safeguard the supply of chips it needs to power growth, especially given imports from China are set to be hit by tariffs of up to 35%, the industry needs robust incentives to compete and raise production levels – rather than see funding taken away.
A vital technology for every major economy – including the UK – most countries have sought to prioritise either importing or expanding their manufacturing capabilities.
Currently, Taiwan produces 50% of the world’s supply of semiconductors, while the US produces 12%. It’s also an area where China is aiming for supremacy. China is currently on track to produce 25% of the world’s chips by 2030, and the threat of a Chinese invasion of Taiwan carries severe implications for the US’ access to the chips which will power the technologies capable of driving economic growth.
For the UK’s semiconductor industry, the two biggest barriers to procuring British chips are cost and availability – increasing the nation’s reliance on international trade. The UK Semiconductor Strategy and the inclusion of a National Semiconductor Institute appear ever more vital to ensure the UK’s access to semiconductors.
Should Trump implement the campaign promises he made to ‘fix it’, some sectors within tech such as AI and digital assets will see upside. However, the risk of trade wars along with higher inflation from tariffs and the mass deportation scheme could have a greater detrimental effect on the overall economy including many areas within tech.
UK tech leaders will need to navigate carefully, identifying opportunities from the policies but also preparing themselves for macroeconomic headaches.
Russ Shaw CBE is the founder of Tech London Advocates & Global Tech Advocates, and a regular UKTN columnist.