Trump-nation and the supply chain eventuality

Photo credits: http://www.telegraph.co.uk

The man with the impressive mop of hair wagged his finger at us back in January when he let fly with:

“We are going to get Apple to build their damn computers and things in this country instead of other countries.

and took a swipe at Ford (which produced 433,000 vehicles in Mexico last year) with this:

“Free trade is good. But we have to do it (force firms to manufacture in the US) or we don’t have a country left.”

The advent of the Internet, the cessation of the Cold War, and developments of free trade agreements spanning the last 30 years have increasingly moved companies to look beyond their borders in order to procure competitively priced material.

Supply chain professionals and the supply chain that they fawn over, have always depended on a global outlook more than state borders and international borders.

“Trade agreements don’t either really create or cost jobs, they’re really fundamentally about efficiency.” – Marc Busch, the Karl F. Landegger Professor of International Business Diplomacy at Georgetown University

David Letterman once did us all a service when he called out Donald Trump on his choice of shirts and ties that were made in Bangladesh and China respectively when the latter was actively criticizing trade policies back in 2012.

What follows are the main issues that are impacting the supply chain realm as we speak.

The Trans-Pacific Partnership (TPP)

What was intended as an instrument to level the playing field in trade has not done a great job in convincing the Americans, some of whom are sure that trade deals could worsen the trade deficit – seeing an increase in imports but a reduction in exports overall?

It is probably key to point out that Republicans have more often than not supported trade agreements in the past, and a modified version of the TPP will be unlikely to pass under a Clinton leadership seeing as congressional Democrats are not up for trade deals.

The current deal was signed on earlier this February, but the entire process would take two years for details to form.

Corporate tax reform

Peering at the tax rates corporations in the US are subject to, one might balk at how it compares with the rest of the world – which makes absolute sense that there are talks about plans for it moving forward in the next 100 days (post-election).

That which makes it tougher for US companies to compete globally could see it being amended through ‘base-broadening’, which means that “in order to lower the rates, we have to cut existing credits, deductions, and other benefits that flow through the tax code in order to balance the economic books”.

Immigration reform

Contrary to popular belief, there is no need to send Mexicans back across the border seeing as the country’s economy is doing rather well for itself – many of them are heading back of their own accord.

“A wall like that would be $100 billion and he’s not going to spend that kind of money, nor are we going to pay for it. But he will make it tougher to stay here.” – Harry Moser, president and founder of the Reshoring Initiative

Some say it would be a great idea if the United States were to form a partnership with Mexico, much like the one-China shares with India. On another note, there is a wealth of talent that the US trains and stands to lose to other countries.

But most importantly

One of the biggest crackdowns that have been snowballing recently involves corruption that “is so pervasive that it really needs to be addressed in a more strategic and thoughtful way”.

Last year, a French power and transportation company by the name of Alstom S.A was found to have been involved in a corruption scheme that was responsible for at least $75 million being distributed amongst countries such as Indonesia, Saudi Arabia, Egypt, Bahamas, and Taiwan.

All of this information snippets make for a great tea-leave reading session, we think.