US election 2024: what a second Trump presidency might mean for your money

From inflation to borrowing costs, Donald Trump's election win could have a meaningful impact on your finances.

On Wednesday morning Brits woke up to the news that Donald Trump was on course to become the 47th President of the United States, beating Democrat candidate and current Vice President Kamala Harris at the polls. 

The former President went on to gain 294 electoral college votes to Harris’s 223 in a victory that was surprisingly comfortable given all the polling done in the buildup. 

On the face of it, a Donald Trump win shouldn’t appear to have much of an effect on our finances this side of the pond. 

However, given globalisation and the worldwide nature of companies and finances these days, there could still be ramifications for British consumers, savers and investors.

Higher inflation?

Prime Minister Keir Starmer will not be expecting any special favours on Anglo-US trade agreements that may help mitigate the effects of Brexit, despite his and Foreign Secretary David Lammy’s efforts to court Trump. 

Trump is expected to introduce stiff trade tariffs – 60% on goods from China – and 20% on those from other countries, including the UK. 

This could ultimately lead to an international trade war as countries retaliate and introduce matching tariffs on US goods. These costs will inevitably be passed onto the consumer.

As such, some economists think the upcoming second Trump presidency could mean higher inflation in general for people in the UK and possibly even higher mortgage rates as a result.  

Paul Dales of Capital Economics told the i newspaper that he forecasts the US Federal Reserve funds rate will rise 0.5% under Trump.

“That would put some upward pressure on UK gilt yields and mean mortgage rates for UK households are a bit higher than otherwise,” he said. “A more inflationary global environment may mean the Bank of England cuts interest rates by less than otherwise.”

Fewer interest rate cuts by the Bank of England could mean mortgage rates staying higher for longer than might have been the case under a Kamala Harris presidency. 

However, this could have a more positive effect on savings as interest rates remain higher. 

Cost of living crisis could continue

Inflationary pressures from Trump’s US trade tariffs could have a worsening effect on the existing cost of living crisis in the US and UK, which has eased as inflation has fallen in recent months. 

“Many voters say they chose Trump because he was straight-talking and they remember the halcyon days when he was previously president,” said Dan Coatsworth, investment analyst at AJ Bell. 

“By voting him back into the White House, these individuals are hoping everything will return to how it previously was, with a lower cost of living at the heart of it all. 

“But there is a real chance that Trump makes things worse, not better, when it comes to the fight against inflation.”

Pressure on global stock markets

The stock markets rose on Wednesday off the back of Trump’s success at the voting booth and the markets performed well before during the President’s previous term in power. 

During Trump’s former presidency inflation was lower than it has been during the Biden era. 

The markets like certainty and the businessman and former star of The Apprentice gives the impression of being pro-business. 

Indeed, Trump has said he will cut US Corporation Tax from 21% to 15% for companies that make their products in the US, which will ease costs for many American businesses. 

This, in theory, should mean that they have more money to reinvest in their companies, boosting share prices. 

However, his expected reduction in immigration is likely to have a negative effect on businesses, as they struggle to hire staff or are forced to pay higher wages. 

“A clamp-down on immigration could also lead to higher wage bills for many American companies if they no longer have a such a big pool of workers happy to accept low-paid jobs or do the work that many others don’t want to do,” Coatsworth points out. 

Ultimately this could have a negative effect on stock market investments. 

London property prices and rents could rise

Another unexpected effect of the forthcoming second Trump presidency could mean an influx of wealthy Americans buying up property in London and other UK cities, as they flee the US, say London estate agents. 

Agents at Sotheby’s International Realty say they have already been fielding calls from individuals in Los Angeles and New York looking to rent in London. 

James Gow, head of London residential sales at Strutt & Parker, told the Standard: "Trump is such a polarising figure that there will be some wealthy Americans who will just think, 'I do not agree with his rhetoric and I just cannot be a part of it,'" he says.

This may be good news for landlords but possibly bad news for those looking to get on the UK property ladder or rent if it pushes up prices generally. 

All in all, Brits will have to wait and see how a second Trump presidency plays out.