With the election fast approaching, all eyes are on America as the world waits with bated breath for the appointment of the next US president.
Few elections have been as close or contentious as that of Kamala Harris and Donald Trump, with the outcome likely to impact international relations, politics, and the global economy.
As one of the world’s largest economies, the US’s economic policies have far-reaching effects on businesses and countries, including Australia. So, how could the outcome of the 2025 US presidential election affect you?
Here are 7 key ways the election could impact Australian small to medium-sized businesses.
Trade Policy and Export Opportunities
A shift in the US administration could influence trade policies affecting Australian exports, especially in sectors such as agriculture, resources, and tech. Under the Australia-United States Free Trade Agreement (AUSFTA), 97% of Australian exports to the US currently benefit from tariff-free access, providing Australian exporters significant stability and access to the US market.
However, changes in US leadership could introduce adjustments in specific trade policies that impact exporters indirectly, particularly if an administration pursues protectionist measures or renegotiation of terms for certain products.
During the Trump administration, tariffs under Section 232 were applied to steel and aluminium imports, impacting global trade dynamics despite existing trade agreements. A Harris administration could lean toward multilateral trade relations that foster greater collaboration, which could provide Australian exporters with continued market access, while a Trump presidency could prioritise “America First” policies.
Currency Volatility and Exchange Rates
Election outcomes often swing the USD, directly affecting the AUD and other global currencies, thereby impacting Australia’s import-export balance. A stronger USD under a Harris administration could drive up prices for Australian exports, while a weaker dollar under Trump might benefit exporters, potentially lowering costs and enhancing competitiveness. The Reserve Bank of Australia (RBA) highlights the AUD’s sensitivity to USD fluctuations, especially around election cycles, due to global market reactions.
Stock Market Trends and Investor Confidence
US elections have a strong influence on global market sentiment, which can lead to shifts in investor confidence. According to analyses by BNN Bloomberg on stocks and on election impacts, changes in US administration often lead to volatility, influencing investment decisions in foreign markets, including Australia. A Harris administration could bring stability, encouraging confidence and investment in Australian tech and startup sectors. While a Trump win might introduce higher volatility, leading US investors to be more cautious, affecting Australian SMBs that rely on foreign investments.
Technology Regulations and Data Privacy
Data policies set in the US affect the global tech industry. A Harris administration is likely to implement stricter data privacy laws, which could require Australian tech firms operating in the US to adjust compliance practices. Trump’s preference for relaxed regulations might benefit large US tech players, potentially increasing competition for Australian tech SMBs.
McGrathNicol’s analysis highlights that as international privacy regulations tighten, like those in the US and EU, Australian businesses may be prompted to adapt their data governance, privacy policies, and compliance strategies to maintain compatibility and avoid penalties. This aligns with ongoing privacy reforms in Australia, which aim to create a stronger regulatory framework similar to global standards, impacting companies that handle data across borders.
Climate Policy and Renewable Energy Investment
Harris’s focus on climate initiatives could bolster green tech investments worldwide, providing a boost to Australian renewable energy companies. In contrast, Trump’s emphasis on traditional energy could slow this shift, impacting SMBs committed to eco-friendly solutions.
Research from CSIRO confirms that renewables, such as solar and wind, remain the most cost-effective new-build power sources in Australia, which is further influenced by international climate policies pushing for sustainable investments. Additionally, the Clean Energy Council’s 2024 report highlights how supportive international climate policies drive further investment in Australia’s renewable energy sector, boosting confidence in green infrastructure.
Financial Lending Rates and Regulations
US interest rate policy has a run-on effect for global borrowing costs. A Harris administration might favour lower rates, making financing cheaper for Australian SMBs.
Conversely, Trump may lean towards higher rates to address inflation, potentially raising the cost of credit and limiting access to affordable loans for capital-intensive businesses in Australia. Insights from the Reserve Bank of Australia and past data on US Federal Reserve decisions show how US monetary policy and US lending rates have a direct impact on Australian financial conditions.
Supply Chains and Geopolitical Stability
Australia’s trade and supply chains are closely linked to both China and the US. Harris’s expected diplomacy may help stabilise trade relations, favouring industries like agriculture, education, and mining. Trump’s aggressive policies towards China, however, could lead to global disruptions, complicating supply chain management for Australian SMBs reliant on imports.
Analysis from the Lowy Institute highlights the vulnerability of Australian supply chains to US-China relations, noting that political tensions can exacerbate instability in critical sectors such as resources and manufacturing, which are heavily dependent on smooth international trade relations.
The US election will undoubtedly have global economic ramifications. For Australian SMBs, the outcome could shape everything from trade policy and market stability to currency fluctuations and tech regulations. Understanding these potential impacts will help businesses stay informed, whilst navigating any global economic shifts due to the election.
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