A Government Affairs Guide to Getting Ready for What Comes Next
With Donald Trump heading back to the White House, one thing is certain, the rulebook is being rewritten. Tariffs may grab headlines, but the challenges of a new Trump era don’t stop there and businesses across Europe need to get ready.
The European Commission might have made contingency plans to deal with the new administration, but let’s be honest, this is going to be damage control. Compared to his first term, President Trump has the mandate and a team with a clear strategy to “protect” American business. Trade wars are on the horizon but with the EU itself an arena for populism, and critical elections on the horizon, business is about to get a lot more political.
So What Should Companies Watch Out For?
Don’t Get Caught in the Crossfire
Trump’s victory has propelled tariffs to the forefront of economic concerns. We are told that the Commission has a plan to counter this, whilst sectors like the automotive industry will have known for a while that they are in the line of fire. But trade wars have a nasty habit of hurting bystanders, those businesses and sectors with no immediate connection to the initial dispute. It’s not just businesses exporting to the US or the EU that will take a hit, random companies relying on imported raw materials for their production could see costs explode. Understanding supply chain exposures will be critically important.
Look Beyond the Obvious
President Trump’s preference for bilateral deals over EU-wide agreements, bypassing EU institutions to negotiate directly with member states, could further fragment the internal market. It could also create tensions when needing to pass new regulations where certain Member States might be more open to listen to US concerns. This patchwork approach may create compliance challenges and increase costs for businesses operating across the Single Market.
The last Commission tried to make progress in forging a coordinated approach to foreign direct investment in strategic sectors, but economic security issues like sanctions and export controls remain firmly in the grasp of individual Member States. For example, concerns by other Member States didn’t stop the Dutch and German governments from allowing Chinese investments in Dutch and German ports, possibly exposing whole supply chains across the continent to geopolitical risk.
Prepare for Data Privacy and Tech Shocks
Europe’s reliance on US cloud services and its partial dependence on Chinese telecommunications technology make data privacy and tech infrastructure another weak spot for a business using any element of these services. A rollback of transatlantic data privacy agreements under Trump could push EU businesses into a compliance scramble, with conflicting US and EU regulations forcing rapid adjustments. Add to this the threat of sanctions on Chinese technology and it’s easy to see significant and costly challenges for European companies relying on Chinese components.
The US tech sector, including tech platforms, cryptocurrency and AI, which supported the Republicans during the election, will now have a solid ally in the White House who can weigh in on any issues they have with current and future EU attempts to regulate their sector. Disruption is coming.
Strengthen Alliances and Ad-hoc Coalitions
Going it alone in this environment is risky. Industry associations, trade bodies and the increasing use of ad-hoc coalitions will be invaluable allies, extending the voice of business not just to Brussels based policy makers, but to key stakeholders at national and local levels. By joining coalitions, particularly those with national roots, companies can strengthen resilience against rapid policy shifts and develop argumentation that accounts for local community interests more likely to resonate with politicians in this new era.
The End of Business as Usual for Government Affairs
In this evolving political landscape, businesses will need to adapt their engagement strategies to effectively interact with populist policymakers. Traditional business advocacy, rooted in data-driven arguments may fall short in an environment where populism and, its extreme form, political patronage, alter the flow of traditional policy making.
Donald Trump’s return to the White House serves as a reminder that populism is not a passing phase that can be ignored until things return to normal. The role of government affairs in the EU is no longer just about advocating for favourable policies in Brussels and letting implementation look after itself, more than ever it’s about helping senior business leaders navigate a landscape where political shifts are as critical as market trends.
So What Can Government Affairs Teams Do Now to Prepare?
Populism has a habit of making everything political, so for government and public affairs teams in businesses across Europe, now is the time to play an essential role in helping senior management understand the changing environment, anticipate risks and stay nimble in this new political era.
Take these steps now:
- Closely monitor geopolitical developments and map potential issues and risks, threats and allies.
- Scrutinise all aspects of the business, from the component parts or services used, to supply chains and the geography of its footprint. This audit should be overlayed with a geopolitical risk assessment, accounting not just for how other countries, like the US might act, but how the EU might consider responding.
- Tailor communications to resonate with new political priorities, emphasising more than ever how business objectives align with national interests and public sentiment. By staying attuned to a more unpredictable political climate and adjusting strategies accordingly, businesses will stand a better chance of engaging effectively with populist decision-makers while avoiding entanglement in partisan conflicts.
- Work with counterparts across supply chains to pinpoint vulnerabilities, especially in areas under export controls or national security concerns and understand which suppliers are “at risk” and where the business may need to shift if policies change rapidly.
- Work closely with IT and compliance departments to assess current dependencies on US and Chinese technologies and evaluate the risks posed by potential secondary sanctions on Chinese components.
- Identify key associations and trade bodies that align with your industry’s interests and join active working groups within them.
- Look beyond natural allies. Some policy areas might require informal ad-hoc coalitions that cut across industry sectors or break out of the business community and forge common purpose with other interest groups that share a particular position or concern. Joining forces to demonstrate the overall impact on wider community interests is more likely to resonate with decision makers in an age of populism.
This will be an era where adaptability, resilience, and proactive political insight are essential for survival and success. It’s time to double down on intelligence, forge stronger alliances, and build strategies that can withstand the political uncertainties ahead.
With decades of experience of working in highly politicised environments, our team at SoWhatCommunications is well placed to help you navigate a path through geo-political ambiguities, building advocacy coalitions and working with trade associations over the coming years.
Andrew Cave, November 2024