INTERVIEW: “Chaos presents opportunities for IFCs” -- US offshore finance expert on Trump’s election victory

With his bold rhetoric on corporate tax cuts, criticism of offshore financial centres, and his criticism of the OECD, what will a second Trump Presidency mean for International Financial Centres? 

Andrew P. Morriss, Professor at Texas A&M University and a leading expert in offshore finance, regulatory policy, and international tax law gives us his view.

Tax policy

We begin by discussing the impact of a second Trump presidency on IFCs.

Morriss explains that: “President Trump isn't particularly inclined to support multilateral efforts, especially those led by Europe”.

Consequently, Morriss expects the U.S. will be less willing to align with OECD initiatives. “In fact,” he explains, “I know people are actively working to persuade the Trump administration to defund the OECD, which would be a significant blow to financial freedom globally.”

Secondly, Morriss points to Trump’s promised tax cuts, which may reduce tax-driven incentives for using IFCs by facilitating such activities within the U.S. itself.

However, thirdly he adds that “Trump is not following the traditional Republican approach of broadening the tax base and lowering rates.”

“Instead,” he continues, “Trump seems more interested in targeted cuts. So, I believe there will be plenty of opportunities for tax-motivated strategies that exploit increased arbitrage possibilities arising from a more complicated and uneven U.S. tax code.”

We ask about the repercussions of a U.S. withdrawal from the OECD. “The U.S. would have an advantage,” he explains, “but it would destabilise things. The problem with cartels – and that’s essentially how the OECD functions – is that there are incentives to defect. Once that happens, the whole structure falls apart.”

Morriss notes that the OECD’s tax initiatives rely on all major economies complying. “If the largest economy withdraws, it undermines the entire framework.” He adds that while a UK Labour government may not follow suit, a future Conservative or Reform government could reconsider the “Singapore on the Thames” idea.

Risk, opportunity, and protectionsim

When discussing the difference between Trump’s first term, Morriss observes that the former President is more organised this time. “He has aggressive day one plans, the ability to push his agenda with control of Congress, and key allies like Elon Musk and JD Vance. But as far as international financial centres are concerned”, he says, “his big priorities will be upending the world trading system.”

“Chaos presents opportunities for IFCs. They don’t just offer tax-related strategies; they also provide legal strategies for managing risk, and when the U.S. is stomping around like a bull in a china shop, there’s going to be a lot more risk. I think the role of IFCs, especially as a place to pool funds and invest where you’re not tied to the European Union— which might be in conflict with the U.S.— or the U.S. itself, in a more neutral space, will likely be greatly enhanced.”

We ask whether increased risk may deter or postpone long-term investment. Morriss asserts that Trump’s approach will create winners and losers, with smart investors capitalising on the opportunities. “There will certainly be 'Trump plays' in the market,” he says. “For example, investing in U.S. oil and gas or manufacturing will be winners as Trump pushes money into these sectors.”

He adds that European investors will likely use IFCs to invest in the U.S. “You’d typically go through investment funds in places like the Cayman Islands or Jersey,” he explains. “This will open up many opportunities for international investment.”

Morriss notes that investors often profit when markets are volatile. “With the expected turmoil, IFCs will provide platforms for investors to capitalise on these shifts, I’m quite bullish about that.”

Given Trump's protectionist policies, we explore whether IFCs could see a decrease in demand from U.S. companies, typically some of their biggest clients. “There may be a decrease,” he acknowledges, “but protectionism often breeds more protectionism. U.S. companies in Europe will need to present as European, so it works both ways.”

He adds, “Those facilitating these structures, or ‘selling masks,’ will likely be in a strong position.”

Big tech and crypto

Finally, we ask about the impact of Trump’s indication that he will relax regulations on big tech and cryptocurrency. “The crypto space has struggled with regulatory threats, particularly from the Securities and Exchange Commission,” he explains. “If Trump adopts a more relaxed stance, it’s likely the sector will thrive. We've already seen Bitcoin and other cryptocurrencies surge in value post-election, in anticipation of this shift."

He suggests that IFCs are better positioned than larger jurisdictions to capitalise on this trend. “For instance, the Cayman Islands has been successful in the digital space with its flexible regulatory regime and foundation companies entity.”

“Overall, top-tier IFCs will do well, while lower-tier jurisdictions may see both legitimate products and dubious operations rise.”

Morriss shifts focus, noting “the biggest implication for big tech companies is that Trump will likely make it easier for them to argue that the EU and OECD tax frameworks are essentially Europe trying to get its hands on American companies. This could push the administration to block measures like the 15 per cent minimum corporate tax rate, which Trump, as a nationalist, will likely resist.”

He adds that the tech industry, especially U.S. companies like Apple, Amazon, and Alphabet, will benefit from Trump’s support. “Manufacturing and oil sectors will also thrive with government backing.” However, Morriss notes that these companies may not invest directly in the U.S., instead using investment funds in places like the Cayman Islands or Jersey.

Turning to Trump’s stance on microchips, Morriss highlights that the U.S. will have to ramp up domestic production, which will be costly and take time, but the government is expected to pour significant funds into the sector. “While this will lead to short-term volatility, IFCs will provide a strong platform for investors to capitalise on these market shifts.”

Closing remarks

Morriss concludes by emphasising that clever investors use IFCs because they offer better platforms for pooling investments. “It’s not just tax-driven,” he explains, “What matters is the legal and regulatory structure they provide, which enables investors to efficiently set up and operate funds.”

“This is great news for jurisdictions strong in funds”, he says. “Trump’s administration will see significant investment flowing into the U.S. We saw this with the Biden administration’s Inflation Reduction Act, which led European manufacturers to build green tech in the U.S. to access subsidies. Under Trump, this will scale up because once a subsidy is in place, it doesn’t go away—it only grows. Smart investors in Europe will recognise this and funnel their money into the U.S. through structures in places like the Cayman Islands, Ireland, or Bermuda.”

As our interview wraps up, Morriss’ take is clear: IFCs will continue to play a vital role under a second Trump presidency. Disruption, protectionism, and relaxed regulation presents numerous opportunities. By adapting to volatility and proving platforms for strategic investment, IFCs are positioned to play a significant role in the global market, especially in sectors like tech and manufacturing.