The re-election of Donald Trump will have a major effect on the US’s importance as a global HNW booking center. However, the degree of inflows—or outflows—will depend on the president-elect’s specific policies and consistency.
Traditionally, election results bring political clarity and clear policy directions—especially when they are as decisive as the 2024 US presidential election. This will not be the case under Trump, who is known for his erratic leadership style and mandate for disruption. Yet his policies will reshape tax policy, the regulatory environment, and economic and geopolitical stability—all of which will have a significant effect on HNW offshore flows, as well as the US’s status as a prime destination for HNW wealth. As per GlobalData’s HNW Offshore Preferences Analytics 2024, 15% of global HNW wealth is booked in the country, making it the world’s leading HNW booking center.
Trump’s previous administration focused on major tax cuts. For example, the Tax Cuts and Jobs Act, which came into effect in 2018, reduced corporate and personal tax rates. Similar policies will attract HNW money onshore if the US is seen as a low tax environment for wealth and investments. At the same time, this will further increase the appeal of US-based structures such as trusts, funds, and limited liability companies due to tax advantages.
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This will further be aided by decreased financial regulation—the promise of which already has seen stock markets soar. Fewer requirements for setting up trusts and holdings companies and reduced due diligence requirements will see increased inflows to states such as Delaware, Nevada, and South Dakota, which are already known for their lenient regulations and privacy.
However, this is assuming that Trump’s policies will not disproportionately favor domestic investors while introducing tax barriers for foreign HNW investors as part of his “America First” agenda. Stricter scrutiny of international transactions, coupled with economic disruption from mass deportations and extraordinary tariffs, will discourage global inflows, favoring other safe havens such as Singapore and Switzerland.
On the flipside, a focus on business-friendly conditions (including deregulation, tax cuts, and reasonable tariffs) without significant instability would strengthen the US dollar and thus increase the appeal of US-based assets, albeit increasing the cost of entry for investors from countries with weaker currencies.
The real question comes down to how much US economic conditions over the next four years will be dominated by the tax cutting and deregulation agenda of the incoming administration or its nativist immigration and trade policy. Offshore investors still await the verdict.
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By GlobalData
Heike van den Hoevel, Principal Analyst, Wealth Management, GlobalData
