Counting down to the Trump era
A look at what US trade policy will look like in the next four years based on the president-elect’s claims thus far.
This week, in his first press conference since the November election, US president-elect Donald Trump offered some bold policy comments, but was vague on specifics. Trump’s protectionist, anti-free trade policy has been one of the few consistencies throughout his election campaign and in the lead-up to his inauguration.
One of the measures proposed by the president-elect is to impose a ‘major border tax’ on companies that manufacture outside the United States, singling out pharmaceutical and biotech companies producing goods overseas. He also focused on the supply chains of major car companies.
spells out a very negative aspect.”]
The big question now is how Trump’s protectionism will be implemented and what it will mean for the rest of the world. We put the question to Naeem Aslam, chief market analyst with London-based Think Markets.
“Trade tariff is the biggest concern,” says Aslam. “And here is our apprehensiveness around that: if he [Trump] places that 45 or 35 percent tariff on his borders, what sort of relationship will he have with the second-biggest economy in the world, when we are looking at China and also, Mexico?”
The president-elect has also been known to make statements that render current trade commitments made by the US null. So what effect would his protectionist policy have on significant relationships, such as that with the World Trade Organisation (WTO)?
“There is not much clarity on what Donald Trump is going to do. There is no assurity on what kind of stance he will take with respect to the WTO, with respect to trade tariffs … he is anti-globalisation. That is the focus for him,” says Aslam.
With the focus on two of the United States’ most obvious trade partners, what kind of effect will the rest of the world feel as a result of Trump’s proposed tariffs? Will we see a global trade war?
“You’re talking about taking jobs back [globally] if you want to make products in the US. [In the case of Boeing] what kind of relationship will the US have with the UK and the EU, if you are moving jobs out of the UK and the EU … these countries surely aren’t going to sit on their hands and say ‘Sure, take away our jobs and all that new investment, put it in the US.’ Certainly, there would be a retaliation,” says Aslam.
Concerns regarding Trump’s trade policies were echoed throughout this year’s Detroit Motor Show as Chinese car makers attempt to enter the lucrative US market. Newcomers to the American market, China’s GAC, hopes to become the first Chinese car maker to sell directly to the American consumer. But with trade policies at risk, especially should China respond in kind to Trump’s threats to impose tariffs on imported goods, this will be a formidable task.
“If you’re a company, like GAC, who’s just starting to want to come to this country, this may not be the best news or time for you … but also remember, Trump doesn’t want to cause major upheaval,” says Karl Brauer, senior analyst at vehicle valuation and automotive research company, Kelly Blue Book.
Also on this episode of Counting the Cost:
Digital influence: President-elect Trump has never been one to shy away from social media. His twitter account – @realDonaldTrump – has over 19.4 million followers. Barack Obama has 80 million and Katy Perry beats them both with 94 million twitter followers. Therefore, when Trump chose to tweet his thanks to Linda Bean, heiress to the L.L.Bean retail brand and recent donor to a Trump-supporting Political Action Committee (PAC) and added “buy L.L.Bean” the message was viewed as an “inappropriate” endorsement.
Marketing professionals like to divide up influencers into categories according to how many people are following them on Facebook, Instagram and Twitter. They are also paying key individuals to promote their brands on social media. Barbara Soltysinka, the CEO and cofounder of London-based marketing platform indaHash, says this is the way forward for many brands, as the industry sees a trend of being reallocated from television to influencer marketing.
“Each person, who has over 700 followers and is really engaging can earn money on campaigns with brands,” says Soltysinka.
Cyber-dependency and the global economy: The risk to global jobs may not be what politicians are telling us. Economic inequality will be the biggest issue in the global economy over the next decade, according to the World Economic Forum (WEF). It’s warning “fundamental reforms” to market capitalism may be needed to tackle the public anger that led to Brexit and the election of Donald Trump.
The WEF’s Global Risks report 2017 also highlights how technological change, more than globalisation, is eroding jobs. It says our rising cyber dependence will also determine the future of the global economy over the next decade. And it’s warning that there are risks associated with letting greater decision-making powers move from humans to Artificial Intelligence (AI) programs.
But to what extent is our global economy actually being run by AI at the moment, and is there any danger in this?
“There are a lot of programs around that are making an impact on the economy, but to say that they are controlling the economy is far too early,” says Edward Tsang, director of the Centre of Computational Finance and Economic Agents at the University of Essex. “Errors made by programs and programmers, and tricks played by some programmers, can both be threats to us … a program that trades, if they make a mistake or if they misbehave, they could damage other people’s interest.”