Potential Impact on Norwegian Business under Trump

The Confederation of Norwegian Enterprise has conducted an analysis following the Republican landslide victory, assessing the potential impact of the Trump administration's second term on Norwegian business.

The analysis can be found in Norwegian on NHO’s website.

Donald Trump secured a decisive victory in the U.S. presidential election, winning both the popular vote and gaining control of Congress. With this strong mandate, Trump has significant political leverage, at least until the midterms in 2026. His second term is expected to mirror the first, though with more administrative experience. Trump is already appointing business-friendly officials like Scott Bessent as Treasury Secretary and Jamieson Greer as Trade Representative.

Foreign and Security Policy

The president has significant freedom in foreign policy.

Trump's approach increases unpredictability. His transactional nature means he prioritizes deals, often across diverse policy areas, with both allies and non-allies. This could lead to geopolitical uncertainty as he leverages every tool available to strike favorable "deals."

The U.S.-China rivalry continues, challenging Europe and Norway. There is bipartisan consensus that China is America's main strategic and economic rival. Trump will expect allies, including the EU, to align with U.S. policy on China, which could create dilemmas given China's role as an important trading partner.

A more inward-focused U.S. Trump often views international relations as a zero-sum game, with winners and losers, rather than seeing mutual benefits in cooperation. He has little interest in multilateralism and has criticized institutions like NATO, WTO, and WHO. Cuts to international organizations' funding are expected, as seen in his first term. For Europe, U.S. support for Ukraine under Trump is a key uncertainty.

The transatlantic relationship may face strain. A more contentious U.S.-EU dynamic could weaken cooperation on global issues like climate and health.

Trade Policy

The U.S. President has significant authority over trade policy but cannot impose broad tariffs without Congress. Trump supports tariffs to reduce the U.S. trade deficit, often proposing import tariffs of 10-20%, and 60% on China. However, such measures could face legal and political challenges.

Higher tariffs could lead to trade wars, especially affecting industries like steel and autos. Norway’s exports to the U.S. (like seafood and metals) may suffer, but impacts depend on factors like currency exchange rates.

Norwegian companies in global supply chains are vulnerable, particularly if U.S.-EU trade tensions escalate, which could also affect Norway. If the U.S. and EU reach exclusive trade agreements, Norway risks losing market competitiveness.

Business policy, including green transition

The president's powers are limited by Congress, states, and courts, however in regards to climate and environmental regulations, the President has broad authority.

Trump is likely to withdraw the U.S. from the Paris Agreement and reduce involvement in other climate processes, cutting support for climate financing to developing countries. This would take effect in February 2026 if initiated early. Nationally, green transition efforts would be deprioritized, though some measures may continue at the state level.

Biden’s infrastructure laws (IIJA, CSA, IRA) will likely face cuts or attempted to be partly removed. The IIJA’s focus on traditional infrastructure may stay, but green projects would likely be reduced. Parts of the IRA could be delayed, especially projects related to electric mobility and renewable energy, though complete reversal is unlikely as some Republican states benefit from IRA investments.

Trump is expected to lift environmental restrictions on fossil fuels, increase oil and gas production, and fast-track LNG export terminals. The offshore wind industry may also face regulatory delays.

Economic Policy and Macro Effects

Increased market volatility. Trump's unpredictability and erratic behavior (especially in foreign policy) could increase fluctuations in stock markets, commodity prices, exchange rates, and more. Greater uncertainty can lead to lower risk appetite and higher risk premiums in the markets.

A continued weak krone (NOK). Geopolitical instability, increased market volatility, and reduced risk appetite drive investors toward "safe havens," like USD, EUR, and JPY, weakening the Norwegian krone. A weaker NOK makes imports more expensive, raising prices in Norway. However, it also makes Norwegian exports cheaper and more competitive, which could offset potential U.S. tariff increases.

Lower taxes are a key part of Donald Trump's economic platform. With Republicans holding a majority in both chambers of Congress, it’s easier to pass his policies. This means the 2017 tax reform (TCJA) will likely continue. Without an extension, tax rates would rise in 2026. Trump also aims to reduce taxes further by eliminating taxes on overtime and tips and lowering the corporate tax rate from 21% to 15%.

The IMF projects a 7.5% GDP budget deficit next year, with the U.S. deficit set to grow by $4 trillion over the next decade, pushing national debt near 100% of GDP. Rising debt increases risks to public finances and may weaken trust in the dollar, potentially leading to fiscal policy shifts and a weaker dollar long-term.

Trump has criticized the central bank and can nominate supporters to the FOMC, which influences interest rates, though Senate approval is required. He also advocates for more presidential control over rate decisions, challenging the bank’s independence. This could weaken trust in the bank and keep inflation high. Despite tough rhetoric, major changes are unlikely due to resistance from Congress, Republicans, and business sectors.

Low likelihood of dollar devaluation: Trump believes the dollar is too strong, which hurts the U.S. economy. A weaker dollar could boost exports but also raise inflation by making imports more expensive, which would pressure interest rates to rise. This conflicts with Trump’s desire for lower rates. Devaluing the dollar would also require defending a new rate or negotiating a multilateral agreement, both difficult and costly. Therefore, politically managing the dollar seems unlikely.

Trump’s protectionist and anti-immigration policies could weaken economic growth potential and increase inflation. Higher tariffs make cross-border trade more expensive, raising import costs and eventually consumer prices. A Peterson Institute study estimates Trump’s proposed tariffs could cost the average American $2,600. More broadly, protectionism reduces international trade, which limits specialization, access to technology, and competition, thereby lowering global growth potential. This particularly harms small, open economies like Norway.