The 2024 US election will come down to the wire. Nationwide polling has both candidates tied, as US swing states will decide who becomes President after one of the most highly anticipated elections in US history. And with everything to play for, Silicon Valley Democrats turning their support towards presidential candidate Trump may have a profound impact on the election outcome.
Christopher Granville, managing director of global political research at macroeconomic forecasting consultancy, TS Lombard, describes the US election result as residing “on a knife edge,” a level of uncertainty which may not necessarily be resolved on election day. A close result has the potential to cause legal warfare, political destabilisation, and civil unrest. For businesses, Granville says that it will be critical to adapt and be prepared for this new set of circumstances.
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Election disruption could see businesses become collateral damage, and picking sides is futile amid a wider business environment of uncertainty. As Democrats make efforts to gain ground on the Republican party’s reputation for being pro-business, Silicon Valley appears to be having an identity crisis. Long considered a left-leaning enclave within the global business community, Silicon Valley differentiated itself from the right-wing industrialists of the past. But a new movement of pro-Trump technology leaders have undergone a Damascene conversion from liberal establishment to unlikely cheerleaders for an overtly right-wing candidate.
The new cabal of Trump supporters, with Elon Musk at the helm – reportedly Trump’s pick for a Washington efficiency tsar – includes venture capitalists Chamath Palihapitiya and David Sacks who held a high-profile Bay Area fundraiser for Trump, in June, with tickets reportedly selling for $50,000 a seat. Though the evening included a $300,000 ticket tier for donors not too shy for a photo opportunity with the candidate, Sacks said on the All-In podcast: “I know there’s going to be a lot of people who support Trump, but they don’t want to admit it.”
Vice Presidential candidate, JD Vance’s Senate seat and path to the White House from US marine, venture capitalist and successful memoirist, was said to be funded and advanced by Silicon Valley veteran investor Peter Thiel, whose brand-name successes include PayPal, Palantir and Founders Fund.
Another notable Silicon Valley Trump supporter includes US entrepreneur Vivek Ramaswamy who ran as a Republican nominee for President in 2023 and has since endorsed Trump and acted as his political surrogate on the campaign trail.
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By GlobalDataTrump’s new era of technology protectionism
Trump’s support in Silicon Valley reflects a wider disillusionment with the neoliberal globalist experiment which has, nonetheless, enabled them to accumulate vast wealth. But US involvement in foreign conflicts, inflation, a global pandemic, and economic uncertainty have seen venture capital flows slow and the IPO market grind to a halt. Tough times for Valley VCs.
In this new harsher reality for tech leaders, there could be a two-word explanation for Trump’s newfound support in Silicon Valley: tax cuts. Trump’s election promise to extend the 2017 corporate tax rate cut from 35% to 21% and his tacit support to reduce this rate further to 15% would be enough to explain why some Democrat die-hards could turn. But it becomes harder to square the switch of allegiance when considering Trump’s fixation of tariffs.
The first Trump presidency was a turning point for free trade and marked the beginning of a new protectionist era. “Behind all the sound and fury of the election, is the US ditching a consensus around multilateral trade and investment,” says Granville who notes, in TS Lombard’s executive briefing on the 2024 US Presidential Election, that this steady vector is centred on the decoupling of the US and China.
The Biden administration approach was to limit decoupling with China to “a small yard with a high fence, namely foundational technology, leaving everything else to mutually beneficial economic cooperation,” says Granville adding: “but that’s not working out, the reality is rampant proliferation of this decoupling with China and this will continue regardless of the outcome of the US election.”
The hegemonic stability theory of globalisation – global stability most recently ensured through US hegemony – is unlikely to return under a Trump presidency advocating a return to trade nationalism, and according to Granville, would result in a fragmented world. Global fragmentation of global supply chains would leave countries to essentially “fend for themselves.”
Trump has proposed a baseline 10-20% global import tariff and 60% or higher tariff on Chinese imports. This will, no doubt, have an inflationary impact on US businesses. The impact will be less immediate than a corporate tax cut but will spike the cost of raw materials and manufacturing in the next decade, according to GlobalData, analyst Carolina Pinto.
“Regardless of who wins the elections, there is bipartisan support towards decoupling supply chains away from China. However, the trajectory of the trade war will be drastically different depending on whether Trump or Harris wins,” says Pinto.
“Big Tech is still and will continue to be heavily dependent on China for raw materials and high-skilled manufacturing. Trump’s proposed tariffs and deceleration of resource allocation towards implementing Biden-era initiatives, including the Inflation Reduction Act and the CHIPS Act, will make decoupling from China more costly for Big Tech,” adds Pinto. So, what is the motivation for some Silicon Valley tech leaders to support measures that may ultimately harm their ability to grow their businesses?
According to Pinto, it depends on the type of technology. “For example, the US electric vehicles (EVs) market has not seen significant penetration from Chinese EV manufacturers. Protectionist policies will ensure that this continues. So, although reshoring may be costly, it secures US EV manufacturers dominance of the domestic market.” A manifesto promise not lost on Tesla founder Musk, no doubt.
And as with many other industries, Silicon Valley favours policies that will least impact its bottom line. “On one hand, it may favor Trump’s tax cuts and dilution of fiscal regulation. On the other hand, it may favor a more holistic financial and administrative support over IRA and CHIPS Act implementation to minimise the cost of reshoring production back to the US,” concludes Pinto.
Trump to reverse Biden era AI executive order
A bright spot in the gloom of economic uncertainty for the technology sector has been the AI boom of the last two years. Venture capital has flooded the AI market and buoyed both investor sentiment and the startup ecosystem. But AI has quickly become a pain point in geopolitical tensions and supply chains, particularly for semiconductors and critical minerals.
For the companies competing to become or remain the next generation of decacorns, the race hinges on many factors, none more critical than AI regulation which is undergoing an ideological tug of war between techno optimists and those doomsters who fear the end of human oversight of machines.
It has been a year since the Biden administration issued an executive order on 30 October 2023 in an effort to set new standards for AI safety, security and data privacy. A Harris presidency would continue the commitments outlined in the order and would represent a continuity of approach.
A Trump presidency, according to the 2024 GOP Platform’s Trump Vance manifesto, would repeal Biden’s “dangerous Executive Order that hinders AI Innovation, and imposes Radical Leftwing ideas on the development of this technology.
The makeup of a post-election Congress will be a critical for getting regulatory oversight of AI development over the line – whether that be light touch regulation or a wholesale review of the way it is becoming widely developed and adopted. All polls predict that a majority Republican Congress is more likely than a Democrat one.
The precarious balance of innovation versus safety concerns around AI is ongoing and complex. The wider technology industry – with a largely ideologically neutral position – is simply trying to harness the growth potential that AI presents.
Netskope global CIO Mike Anderson says that the global tech industry stands at a crossroads where innovation and regulation must strike a careful balance. “As we approach the US election, one thing is clear: over-regulation could put us at a disadvantage in the race to harness technologies like generative AI. Bad actors aren’t waiting on regulation, and we can’t hold ourselves back, either.
Instead, we should focus on advancing AI responsibly to ensure it can be a powerful tool in countering global threats. If we get bogged down in red tape, we risk ceding critical ground to those who don’t play by the same rules.”
Most technology businesses can only prepare for the regulation that currently exists – namely the EU’s AI Act. Indian multinational IT products and services giant HCLTech’s CTO, Vijay Guntur, says that by certifying products and services according to the EU’s AI Act, companies can broadly ensure compliance. But, as always, the broader response to any business challenge, including regulation, is nuanced.
Guntur’s hope is that while regulation becomes more pervasive, it will also become more thoughtful in defining areas of high-risk for AI development “but there will be many areas where a light touch is appropriate to get products and services to customers. So, we are preparing ourselves as an organisation for multi-tier regulation,” adds Guntur.
Trump’s pledge to crypto and space optimists
Trump has resonated with the libertarian streak running through the heart of Silicon Valley’s left leaning culture, homing in on the most libertarian of all its global exports: cryptocurrency. Designed to create a new financial world order free from the constraints of centralised government control, Trump has publicly pledged to end the Democrat’s efforts to crackdown on cryptocurrencies with increased regulation, as well as opposing plans for the creation of central bank digital currencies – digital money controlled by government.
Trump has also pledged to create a robust manufacturing industry in Near Earth Orbit, sending astronauts back to the moon, and onward to Mars, enhancing partnerships with the rapidly expanding commercial space sector to “revolutionise our ability to access, live in, and develop assets in space.”
If Musk was the mark, then Trump hit the target hard. Aspirations of space travel, and tariffs on Chinese EVs, as well as tax cuts all have the leader of the Silicon Valley for Trump pack ready to don a red baseball camp and hold a fist up to rally crowds in support of his chosen candidate.
