From the end of globalization to a surge in raw material prices, analysts have a lot to say about the Trump presidency. The overwhelming consensus, though, is that we just don’t know how Trump’s first term will play out.
But uncertainty has never discouraged markets. Here’s how supply chains are responding to, and bracing for, President Trump:
TPP No More?
- There is widespread agreement that Trump will dismantle progress made on the controversial Trans-Pacific Partnership, as part of a wider crackdown on global trade.
- In addition, Trump wants to renegotiate NAFTA, leaving Mexico’s factories concerned about American companies halting business.
- China, too, should be concerned: Trump wants to impose harsh tariffs and has spoken of starting a trade war with the nation. But movement away from cheap labor in China would mean more expensive American goods.
- And even if there is a wave of “reshoring” to the U.S., it won’t necessarily mean more jobs. A rise in automation means fewer jobs for humans. Warehouses may be job seekers’ best bets.
- Trump wants to reduce American dependency on foreign energy sources—that could mean higher energy costs, but could also enhance America’s renewable energy businesses.
- According to the Washington Post, industries like oil, coal, and gas are set to profit from Trump as America leans on homegrown businesses to provide energy.
It’s not a Steel
- U.S. Steel’s stock price surged by 30 percent in the few days after the election—Trump has pledged investment in infrastructure, which would mean more steel and could also lead to job creation.
- Analysts are predicting a long-term wave of investment in steel, which has already begun: Morgan Stanley announced that it plans to invest in both U.S. and AK Steel.
- If Trump does indeed build his wall, expect raw materials prices to shoot up.
Rough Seas Ahead?
- Shipping companies are concerned that a decline in global trade will slow down an already lagging industry.
- In the weeks leading up to the election, AP Maersk reported a 43 percent drop in profits.
- However, the company stated “The U.S. is an important market for us, and a big influence across the world,” a Maersk spokesman reportedly said. “It’s too early to speculate about how the election result will impact our business.”