As the world reeled in the wake of Brexit, the world is reeling once more in the wake of Trump’s US election win. Come 2017 when Trump takes office, and the dust has settled, what will his win mean for the global supply chain? And specifically, what are the implications for the UK?
Promises and Proposals
Trump’s campaign had a tendency to focus on personality-politics and the result was that real strategy and promises of what his Presidential term would look like got lost in the fog. Much of what was expressed at campaign speeches didn’t necessarily have the data to back it up: Time will tell if it’s empty rhetoric. Additionally, don’t forget that despite the seeming power of the US President, they don’t operate in a vacuum. Trump will have to get his policies and strategies through Congress. We saw with Obama that delivering promises often came in to trouble at this point.
Nonetheless, Trump has promised actions of seismic proportions for the Supply Chain. He called NAFTA “the worst trade deal in the history of the country”, he outrightly stated that he is “going to withdraw the United States from the Trans-Pacific Partnership”, and “we can’t continue to allow China to rape our country” (Bloomberg).
Britain’s Special Relationship with the US
Supply Chains operating with elements of the chain in the US, as is the case with many UK retailers, may find that it becomes a very tough situation. Given 44% of UK retailers currently sell to the US, and 59% believe that the US is the number 1 eCommerce market to get into, this is worrying (Fashionunited.co.uk).
Whilst the UK-US special relationship has seen Trump implying that the UK will be favoured, and indeed Trump was in the Brexit camp, the reality is much more complex. For the many companies who complete manufacturing and assembly in China or Mexico, this is particularly likely to create a changing dynamic on the supply chain.
China & Mexico – The Knock-On Effects
Based on Trump’s pre-election pledges we know China and Mexico are going to be hit hard. This can’t help but have an enormous knock-on effect to the global supply chain. The worst-case scenario is a trade war. On a lesser scale, the damage is difficult to accurately predict until we know the rhetoric versus the reality.
The problems for China and Mexico could, as a by-product, give the UK a leg-up. However, many UK companies have been utilising Mexico as part of their supply chain, for example Cath Kidston, and Tate and Lyle. It’s yet to be seen what effect Trump will have on businesses like these.
The Supply Chain Winners
Where there are losers there will always be winners. At the moment supply chain winners are looking set to include pharmaceuticals, biotech, oil and gas, and defence industries (Financial Times).
Time Will Tell
Despite the presidential election campaign, Trump is not yet really on the starting blocks. January, when he becomes president, will mark the start. The markets will begin to settle in the same way they have post-Brexit, and the effect of Trump’s win on the UK supply chain will start to become apparent.