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What will the Trump presidency mean for international trade & investment

On Jan. 20, Donald J. Trump was inaugurated as the 45th President of the United States, and some things will no doubt change on Capitol Hill along with other places. One of the pledges that President Trump made during his campaign was to help the U.S. economy grow again. To that extent, I think it will be interesting to see how his “Make America Great Again” pledge will impact international trade. 

 

TPP, T-TIP, and NAFTA 

On his first full business day in office, Jan. 23, President Trump kept his campaign promise by signing an executive order to withdraw the U.S. from TPP (the Trans-Pacific Partnership). But even if Trump had not won the presidential election, I think it is fair to say that the U.S. would not be part of TPP and T-TIP (Transatlantic Trade and Investment Partnership). There were too many comments from the Hillary Clinton camp that she was not in support of these trade agreements because in the end, the U.S. would not have benefited from them as one might have hoped. Also, the votes in Congress didn’t appear to be there. 

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As for the future of NAFTA, and Trump wanting to renegotiate the treaty to better favor the U.S. and its workforce, time will only tell. While it has been a battle cry for many politicians, if you take a closer look at what impact NAFTA has had on our overall economy, it has been minimal. Yes there have been some job losses but not in the epic proportion your politicians want you to believe.

 

I want to point out that trade agreements in principle can be good vehicles to promote bilateral trade and investment because they can cut down on the red tape, hassle, and cost of shipping goods from one country to another. Will Trump’s administration find a way to improve trade relations with the world’s largest economies without upsetting the apple cart? We shall see.

 

How will the Trump Administration impact the SMB community?

While Trump has made the news about impacting companies like Carrier, Ford, and Boeing — to name a few — I am not certain that any of his policies on foreign trade will have a significant effect on the SMB (small and medium-sized businesses) community. Why? Because I don’t see this administration changing any of the groundwork that makes up the foundation for international trade. Most SMBs are looking for channel partners to help introduce their products or services into an international market. This could take the form or a distributor, joint venture, private label, or even a sales-rep arrangement. 

 

I think President Trump’s focus will continue to be on big businesses and leveraging pressure on them to help fulfill some of his campaign promises. This could actually have a net positive effect on the overall economy, because if a large player like Ford is going to keep more jobs in its U.S. facilities, that should have a positive impact on the local suppliers to a company like Ford. On the international side of things, it may cause even more SMBs from overseas who want to do business with the Fords of the world, to increase their investment in the U.S. That in turn would create more American jobs.

 

What will the future hold?

I believe that foreign direct investment (FDI) will continue to outpace any exports that U.S. companies conduct, in part because America is still the number one economy in the world, and everyone sees a future for themselves here. The outgoing executive director for Select USA, who stated that under the Obama Administration FDI increased by 53 percent, drives this last point home. Do I believe that U.S. companies, in particular SMBs, should continue to explore foreign markets to grow their business, especially if they are in a mature market. Absolutely. Do I think that a Trump Administration will adversely impact U.S. trade with foreign nations? No, because if we have what others want, they won’t let politics get in the way. They’ll still do business with us.

 

As always, I welcome your feedback.           

 

Mark Lesselroth is founder and principal of Brenner Business Development, an international business-development consultancy focused on helping small- and mid-size businesses in the U.S. to explore international opportunities as well as assisting foreign-owned companies in gaining market entry into the U.S. Contact him at mark@brennerbd.com

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