While many in the international community as well as the US looked on in shock as businessman Donald Trump became President-elect at the beginning of November, others feel it is merely indicative of a wider global backlash. It started with Brexit back in June, followed by the election of Trump in November, and just as this issue went to print, the referendum defeat in Italy, all of which point towards a populist movement by those dissatisfied with globalisation, the elite and liberalism.
Perhaps as never before, the future of the US business supplies industry is dependent on what the incoming President of the country will really do once firmly ensconced in the White House.
For Trump, his ‘America First’ campaign has clearly resonated with vast swathes of the population, but there are mixed feelings from all business quarters over his trade and economic policies.
Only time will tell if his protectionist economic and trade stance will help or hinder the OP industry. As always, there will be winners and losers, but this time they could be more pronounced if Trump gets his way on some of his promised policies.
We say ‘promised’, as Trump has flip-flopped throughout the election on numerous topics with some being pure rhetoric; since winning in November he has also backed down or softened his approach on several issues key to his campaign. A case in point is reversing his decision regarding the imprisonment of Hillary Clinton over the FBI investigations into her use of a private email server while she was Secretary of State.
While many in the US applaud Trump for his thus-far tough stance on trade agreements such as the Trans-Pacific Partnership (TPP) and the North American Free Trade Agreement (NAFTA), others are worried about the impact the breakdown of trade will have, particularly on pricing. Indeed, Trump made his views very clear on Twitter in early December stating that tariffs would be imposed on imported goods.
The TPP – which Hillary Clinton also spoke out against – was used during the campaign to highlight the loss of US jobs. Supporters claim the 12-country trade agreement is designed to protect intellectual property and ease trade between Pacific Rim nations and the US. Per the official TPP website, the pact eliminates over 18,000 tariffs on Made-in-America exports and numerous other benefits, but there have been protests against the agreement, not just in the US but also other countries including New Zealand, Peru and Japan.
Trump has promised to signal his intent to withdraw from the TPP – which incidentally doesn’t include China – on his first day in office. Removing the US from the TPP will certainly send a strong signal to the rest of the world that he is extremely serious about protectionism and prepared to ignore opponents which argue that rejecting globalisation will seriously hamper economic growth worldwide, which in turn will end up affecting the US economy.
In addition, although China is not part of the TPP, it has been working on a regional free trade deal that doesn’t include the US. The Regional Comprehensive Economic Partnership is formed of 16 nations from the Association of Southeast Asian Nations along with Australia, New Zealand, Japan, India, the Republic of Korea and China. This has some analysts worried that it will put the US at a disadvantage while raising China’s economic power and influence.
Talking of China, the country has been the focus of much of Trump’s wrath, to the point that he has called it a “currency manipulator”. Recently, he further invoked China’s anger by accepting a call from the President of Taiwan, upsetting international diplomatic protocol.
Another Twitter rant posted in the aftermath of the aforementioned Taiwanese call have some onlookers worried that Trump is heading towards a trade war with China and other nations, which will undoubtedly cause some US multinationals to take action to prevent this. It also puts him at odds with many in his own party.
On the other hand, in its recent economic forecast summary, the Organization for Economic Cooperation and Development (OECD) said Trump’s expected increase on infrastructure spending and other investments, along with lower taxes, will help GDP in the US return to a moderate growth in 2017 and strengthen it in 2018.
However, it did concur that the risks to the outlook are “sizeable”, also adding that growth would be hurt if there were disruptions to international trade. OECD Secretary-General Ángel Gurría warned: “After the financial crisis and its legacy of debt overhangs and sluggish growth, the temptation to use protectionist policies to boost demand for domestic production is high. But world trade growth is already exceptionally weak. In 2016, we expect world trade volumes to expand by less than global GDP for only the third time in the past 30 years.”
Still, until President-elect Donald Trump takes the Oath of Office on 20 January 2017, everything is pure conjecture. His cabinet was not fully staffed yet at the time of going to print, and who knows what will happen between now and then.
Trump is playing by his own rulebook and nothing is likely to be simple or straightforward. It will be an interesting four years, not just for the business supplies industry, but for the US and the rest of the world too.
The OP industry speaks…
“A historic race for leadership of this country. Our democracy has many checks and balances that do not allow any one group or person from making decisions that negatively affect the US or the rest of the world without much debate or thought. The idea of this democracy is that those elected to our government represent the voice of the people.
Let’s hope that this new government represents that voice well. It is apparent that the people in the US wanted change. We all hope that our country will heal its divisions and will push forward to economic stability and growth. If we can accomplish this for ourselves, it will do nothing but benefit the rest of the world.” Greg Welchans, CEO, Supplies Network (US)
“Trump clearly believes globalisation is a major problem although his business practices do not demonstrate it. I think he will try to repatriate cash held overseas. He will impose increased tariffs and duties on Chinese goods in order to try to stimulate US manufacturing etc. Our trade relations with Europe will also be at risk – but China will be first, which therefore could benefit European manufacturers. He will cut taxes for the wealthy and corporations so the B2B market and investments in new infrastructure will be positive for OP resellers. More buildings = more offices, meeting rooms, etc = more OP.” Beth Wright, Chief Commercial Officer, Bi-silque (Portugal)
“Stunned. Ecstatic. Ordinary folks came out and finally won. If he comes through which requires Congress to rally around him, small business and entrepreneurial dreamers win! The key concern will be the dynamic requiring 60 votes in the Senate to move a piece of legislation forward. My hope is that Trump brings humility and a conciliatory vibe moving forward; we don’t need an ‘end zone’ dance by the President-elect or his key followers. Governing will no doubt prove more difficult than even campaigning.” David Guernsey, CEO, Guernsey (US)
“Voter disaffection has given a result that was not expected by most experts. There is a new trend among voters that has shown its face both in Europe and now in the US. The situation is new territory, with threats and a great deal of uncertainty as a result for the market and the economy, and of course for people in general. This will affect the OP industry not specifically, but as part of the market as a whole. In our market (Europe), the currency and free trade situations will probably be affected in different ways, and the uncertainty itself will create a slowdown effect.” Stefan Sonesson, Managing Director, RKV (Sweden)
“Having got the last three predictions wrong about Scotland leaving the UK, the UK leaving the EU and Clinton being a narrow winner in the US election, I think I should give up making predictions! Or at least label them with a serious health warning. The good news about the result is at least it brings the election to a close. We can all stop watching with fascination and get on with life as usual. Productivity will recover. As one schoolboy tweeted: “How can I do my homework when all this history is going on around me?” I believe the special friendship between the UK and US will continue to extend into an ongoing positive business relationship whatever type of Brexit we see ahead. If Project Wall can be put on the backburner for a bit, we in the UK are absolutely open for trade. The UK remains one of the world’s largest and most dynamic economies and we speak a type of English too!” Phil Lawson, CEO, BOSS Federation (UK)
“First reaction: surprise. This shows that our western developed democracies and their elites have been blind to the resentment of a growing part of the population who has not benefited from globalisation and the digital revolution. There is an obvious parallel with the success of Brexit, or to a certain extent with that of Marine Le Pen in France. Second reaction: what now? What will Trump do? What policies will he really try to implement? Difficult to know at the moment.
Some key topics announced during the campaign:
- Investment in much-needed infrastructures in the US
- Much more control on borders and tougher stance on illegal immigration, but to which extent?
- Attempts at restraining free trade to protect local manufacturing, but how far can it go with China in particular?
- Tougher stance against ISIS together with Russia
- Tax breaks for businesses and the wealthiest
Third reaction: impact on the office supplies industry? The impact is not clear at the moment except perhaps the fact that low-cost supply from China or other Asian countries might be compromised in the future (if heavy duties are pushed and implemented under Trump’s administration). Also a more aggressive foreign policy towards Iran for instance could lead to some more instability which is never good for business. For Europe and France in particular, I see no direct impact from this election as long as the global economy is not damaged.” Nicolas Potier, Managing Director, JM Bruneau (France)
“One has to be careful of immediate thoughts. I think that is what Donald Trump reveals all too often and worries the rest of the world with! However, I feel like I did on 24 June waking up to Brexit:
- Step 1 – Shock. Can’t believe it!
- Step 2 – Well, don’t blame me it wasn’t my fault!
- Step 3 – Which muppets did that to us?
- Step 4 – Check my slight degree of satisfaction that the underdog won and that some smug pollsters will lose their jobs.
- Step 5 – Let’s get on with it!
Alex Tatham, Managing Director, Westcoast (UK)
“I think in general the results are very much like the UK Brexit vote: people are sick and tired of the status quo and want a change. Not superficial change but real change. Donald Trump, for all his faults, is viewed as a total outsider who will impose change on the bureaucracy that runs this country. How successful he will be is a question that will be answered over the next four years. His election could be the beginning of a major shift in how the US behaves domestically and on the world stage or, conversely, if his agenda bogs down or is stillborn, an indicator of just how firmly entrenched the bureaucrats are. Time will tell and I am not willing to take bets on how it will shake out. Our industry will fare parallel to how the US economy fares. If Trump is able to invigorate investment and manufacturing, as he has promised, the economy and the business products industry will benefit. Unfortunately, because he has no track record, no political past to compare, we just don’t know today how things will turn out. So everything you will hear between now and his inauguration is speculation. The one indicator that could be a glimpse into the future is the folks he begins to pull in around him. As he starts to build his administration, a picture should emerge of what the next four years may have in store for us. Either way, this is just the beginning of what appears to be an interesting period for the US and for the world.” Mike Maggio, President, TriMega (US)
“I think we still have a long way to go on this front. China is a major trading partner for Australia. If the US put protectionist policies against China, it may flow on to the Australian market. We currently have a free trade agreement with the US, as well as the pending Trans Pacific Trade partnership (TPP). Trump has committed to kill the TPP, but as yet we wouldn’t think that would affect the current free trade agreement – but we don’t know. All these factors could have a significant impact on our currency, and that most certainly would impact our market. So there are many aspects to be considered. But to call what would actually happen in the next four years with Trump would be a guess at best. My overriding concern is that uncertainty may affect demand, but I would not expect that to be significant in Australia in the short term.” Gavin Ward, CEO, Office Brands (Australia)
“It has been a shock after all of the polls reporting a Clinton win to wake up to a different President than the world expected. But as a British person I was also surprised by our Brexit vote, so I am having to rethink what I know and what surprises me. I have a very pragmatic view on both events, which is once a decision is made we have a duty to make the best of any situation. Looking forward is the only solution and once change starts to happen how do we adapt and adjust to that change? On the day of the result, I still went to the office, had my morning coffee, printed some documents and attended an internal meeting with lots of pens and pads being used. This morning walking and looking around was the same as yesterday and I expect the same will be tomorrow. Of course, change will come and we need to start planning for it. What we are planning for though is the major question on all our lips.” Mike Ayckbourn, EMEA Director, International Key Account Business Solutions, Benelux and Nordics, Newell Brands (Switzerland)
“Trump’s election win was certainly a surprise, but I suspect it had more to do with his ‘competition’, mixed with a little help from the FBI! The theory of a businessman rather than a politician running the largest economy on the planet could be positive, but will very much depend on how much of the campaign rhetoric is now unpicked/delivered. I get putting your homeland first and was encouraged by his scripted acceptance speech in terms of building bridges in international relationships and trade. Time will tell, but with both houses in the same camp and a headstrong leader, driving change will undoubtedly lead to interesting times ahead! No immediate impact on a UK-based business as following Brexit. The pound’s weakness has been a major factor for imported goods.” Jeff Whiteway, CEO, SPOT Group (UK)
“The poll that I believed right from the start of this election season was that a majority of Americans want change. The exit polls proved it – 68% of voters want change. And they got it, in a huge way! Now that the people have spoken, I trust that our elected leaders will show up to work, listen to the American people, seriously end the deadlock in DC, and compromise where necessary to solve some of our country’s challenges. Gee, sounds like something I have heard about from some people in our own channel!” Mike Gentile, CEO, Independent Stationers (US)
“After the shock and anxiety subsides globally because of the unknown, I think there is a tremendous opportunity for the American economy. In my opinion, technology has been and will continue to be the main reason for our industry’s erosion not politics. If Trump can bring back the trillions of dollars that has been parked outside of the US, lower corporate taxes and lay out a plan to reinvest in our infrastructure, there will be a lot of jobs created which should be positive for our industry. Also, with so many people claiming they would leave the planet if Trump was elected, I see a huge opportunity for supplying the first colony on the Moon!” Michael Brown, CEO, HiTouch (US)
“The first challenge will be pulling the country together. With Trump winning that leaves many people dissatisfied and emotionally concerned. For the country to move forward we have to get behind our new President. With that in mind, Trump has to be conscious of 50% of the country not supporting him. With the Republican Party now in control of both houses you would assume that Trump will be able to push things through, but with so many of his own party not in support of him it may not be that easy to get things done. The beauty of our government is the checks and balance system we have. The campaign was short on details regarding his policies on trade/NAFTA and many others. So what he truly plans to do is unknown, but his comments were enough for many Americans that want change to vote him in. I believe we will be living in ambiguity for a while until we truly see how all of this plays out. As a result, the markets may be a bit unsettled for a period of time.” Harry Dochelli, President of Business & Facility Essentials, Essendant (US)
“Donald Trump has won this exciting election although it seems that Hilary Clinton gained the majority of the votes. So based on this, Trump has to think about more than 50% of the nation who are dissatisfied and concerned – especially among younger people. The Republicans have also gained the majority in the Senate and the House of Representatives. Normally, you would say that it would now be easy to push things through, but Trump first needs to get the support of his own party. So in the coming months we will see what direction it will go. Trump really needs to reveal what his plans are and he needs to keep his promises, otherwise an even bigger group will be disappointed. I expect that the US market will be more internally focused in the next few months and it will therefore create a slowdown effect. After Brexit, this is the second time that polls are wrong with their predictions. As there are several upcoming elections in Europe, this could bring more uncertainty to markets. As a result of that, it will probably have an effect on economics, currency and trade situations as well. Time will tell!” Jos Zimmerman, Key Account Director, Away From Home Professional Hygiene Europe, SCA (Netherlands)
“Donald Trump is above all a businessman. I therefore think that he is going to be very pragmatic and despite the sometimes worrying promises he has made during his election campaign (about protectionist measures, notably), I think he – and his advisors – will make sure they do not destabilise the international economy. They might indeed raise taxes on foreign products, but their partners around the world would do the same thing… As the US is the second biggest exporter in the world, I doubt import taxes will be raised too much. Our main concern is the exchange rate as the US dollar might become weaker versus the euro, which would penalise sales to the US by European companies such as CEP.”Cédrik Longin, Managing Director, CEP (France)
“I think the impact of the US election result can probably be categorised into three areas with respect to impact on our industry:
- Further economic uncertainty, volatility and impact on currencies that will exacerbate the current volatility with respect to exchange rates. Regardless of whether this volatility is having a favourable or adverse effect, it’s already clear that our traditional product categories and channels struggle with dynamic price changes – this could play into the hand of ‘challenger’ entrants in the e-commerce space that are able to react more quickly Any adverse effect will definitely force many into making more aggressive decisions around unprofitable brands, product lines and customers that they have not been willing to do so far, with only modest price changes generally ‘buffered’ down the channel. This will certainly throw a number of business models into question.
- Regionalisation and local focus. I get the sense the US result coupled with Brexit is refocusing governments and hence markets onto their domestic scene in a much stronger way than ever before. Any weakening or significant impact on the domestic market in the US may force a retrenchment of focus and investment into local issues to the detriment of non-US markets. This will particularly affect US-based globals and obviously it may have the opposite effect of forcing investment in emerging markets and territories? There’s evidence of this already with Office Depot and Staples.
- Catalyst for change. This market is ripe for change. The level of material change seen so far has been relatively low given the obvious need with respect to go-to market strategies, complex channel structures, poor use of technology and consolidation. Another ‘surprise’ result could just catalyse real movement and structural shift in our market…” Steve Haworth, CEO, EVO Group (UK)
Plan to rebuild the US economy by fighting for free trade
- Withdraw from the Trans-Pacific Partnership
- Appoint tough negotiators
- Find trade agreement violations by foreign countries and end the abuses
- Renegotiate the North American Free Trade Agreement or withdraw
- Label China a currency manipulator
- Bring trade cases against China for unfair subsidy behaviour
- Use presidential power to remedy trade disputes if China doesn’t stop its
- illegal activities
- Create 25 million new jobs over the next decade
- A pro-growth tax plan (every income group will receive a tax cut); a moratorium on new federal regulations; an America-First trade policy, a US energy plan (includes lifting unnecessary restrictions on all sources of energy); and the ‘penny’ plan (reducing non-defence, non-safety net spending by 1% of the previous year’s total each year)
- Boost growth to 3.5% per year on average