Here Are the Companies Talking About Trump's Tariffs

Political Risk

Juan J. Lucero

University of Redlands

        Currently the United States is center stage in a multitude of political and economic events. The United States continues to have a positive risk assessment score. The United States is considered to be a stable economic and political force; however, it is entered a very uncertain climate with a multitude domestic politics and foreign. Domestically the government is currently shutdown causing for a drop-in business and consumer confidence. The current shutdown is the longest in history could also influence the country's debt ceiling beginning in March if unresolved. Internationally tension is mounting with North Korea, NAFTA is in talks to be cancelled if no agreement between Canada and the U.S is made and the trade war with China continues to intensify.

        Besides the political and economic risks, there are some legal concerns with the current President of the United States that increases political risk. The President has been investigated for a large portion of his term and many associates of the president have been arrested or indicted. I will identify the top political risks faced by the United States.

Global Trade Protectionism

        Trade protectionism is the deliberate attempt by a country to limit trade even if the market is open. Barriers of entry are placed to slow down trade. The United States is currently taking the lead questioning fairness of current trade deals. The focus is with China and the current cabinet has filed cases of unfair trade practices with China further increasing the tension. The United States is also threatening to disband NAFTA beginning with Canada This move could signal to other countries with trade deficits with the United States that they too would be targets of trade barriers.  The United States has also mentioned that they would leave the WTO (World Trade Organization) this move could weaken substantially the international trade system. While the United States becomes more of a protectionist other country will fill a role in international trade. China in the Asia could begin to diversify its investments throughout Asia. Mexico could become more diverse and trade away from the United States and focus its trade on Europe and Asia alike.

Effects on Business Conditions

        With the United States affecting trade the direct effect will mostly affect consumption, employment and investment. The changes in these three categories will have a negative impact on the United States Gross Domestic Product. The United States has relied heavily on outsourcing jobs and importing cheaper goods, which will make it hard for the U.S to substitute products increasing consumerism. ON the other side of the spectrum the U.S will be further impacted by tariffs abroad and lower imports will only have minimal offset. All this will make more expensive to invest in the United States adding another dimension of cause and effect. An example of direct hit to a company is Whirlpool who has been vocal about the tariffs. A Whirlpool spokesman states that the rise in steel is affecting the product, which is a direct reflection of the increased tariffs.  On the other side Nucor, a producer of steel product agrees with current policy on trade. “The tariffs send a clear message that the U.S. is done asking nicely for compliance with the rules of trade,” said Nucor Chairman and CEO John Ferriola.^[1] At this point there is a noticeable effect, but it is hard to determine the benefit.