How Donald Trump's election as US President may impact Cyprus' economy

Voters in the US have elected Republican candidate Donald Trump as the new President of the US, making him only the second man in history to serve two non-consecutive terms as the country’s president.

Commenting on the potential impact of Trump’s triumph on the local economy and business scene in the lead up to the elections, experts in Cyprus had suggested his policies would likely be more disruptive than those of his Democrat opponent, Kamala Harris.

In comments to CBN, Cyprus Employers & Industrialists Federation (OEB) Director General Michalis Antoniou and Cyprus Chamber of Commerce and Industry (CCCI) Secretary General Marios Tsiakkis noted that any impact on Cyprus would most significantly depend on the successful candidate's policies regarding the US' trade relations with the EU.

“If the Republican candidate (Trump) is elected, issues may arise from the ‘America First’ rhetoric which prioritises US goods and services,” Antoniou noted, adding this would in turn impact factors such as tariff policies.

Antoniou also said that the isolation of an economy as huge as that of the US and the resulting effect on the global economy and defence issues was significant and would mean that the EU would have to move faster on strengthening sectors such as the defence industry while also taking action to ensure smoother trade.

Referring to the ‘Make America Great Again’ approach promoted by the Republican candidate, Tsiakkis noted this also meant that “Trump has his own agenda when it comes to the EU” such as changes to tariffs.

As a result, the impact on Cyprus, as with all members of the EU, would depend on Trump’s policies.

“Harris’ approach would be a little more predictable,” Tsiakkis said, adding that Trump could be considered a more disruptive force.

Tsakkis went on to underline that as he had mentioned, the impact on Cyprus was not considered to be one of immediate danger, and would depend on the USA’s policies concerning the EU as well as concerning other global powers such as China.

On his part, Pantelis Pantelides, Executive Director, American Chamber of Commerce in Cyprus (AmCham Cyprus) told CBN, "If former President Trump is to be re-elected, his proposed 10% tariff on all imports could harm Europe’s export – led sectors. So, there is a real risk of increased competition between the EU and the US, with each side likely to respond to tariffs imposed by the other with protectionist policies.”

“In addition,” Pantelides continued, “the EU would also most likely try to diversify and secure trade agreements with other partners such as Mercosur (Latin America) and India. This effect would likely be exacerbated if the dollar were to strengthen significantly against the euro as a result of trade tariffs”

Although the service sector would likely feel less of a direct impact than the goods sectors under a tariff regime, any retaliatory measures or escalation of trade barriers could disrupt sectors like finance, tourism and professional services, which are critical to our economy,” the AmCham Executive Director also said.

Pantelides added that he anticipated Trump would “proceed with corporate tax cuts and maintaining high budget deficits, which, in combination with imposing high trade tariffs, would lead to higher interest rates and elevated inflation which will also have worldwide repercussions."

Also read: Michalis Antoniou and Marios Tsiakkis weigh in on the US elections’ potential impact on the Cyprus business scene

Also read: Trump vs Harris: What each candidate’s election would mean for Cyprus according to AmCham