Geo-political re-alignment expected as recent US government policies come into effect, finds Frost & Sullivan’s Global Industrial Automation & Process Control and Emerging Market Innovation teams
The US manufacturing industry will see moderate growth over the next four years, as President Donald Trump shifts away from the previous administration’s trade policies towards policies oriented at boosting local manufacturing. These policies are being framed amidst the backdrop of decline in US manufacturing employment and establishments as well as loss of manufacturing export market to China.
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Donald Trump’s Policy Direction and Analysis of Its Impact on US Manufacturing, part of Frost & Sullivan’s Industrial Automation & Process Control Growth Partnership Service program, explores Trump’s trade, corporate tax and environment policy direction, while evaluating the associated benefits and risks for US manufacturing. The study also encompasses an industry-specific outlook.
“Trump’s policy direction on trade, tax and environment will reshape the investment landscape to make manufacturing value-networks smarter, faster and more responsive,” said Frost & Sullivan Industrial Automation and Process Control Research Manager Muthuraman “Ram” Ramasamy. “The US is rapidly rearranging priorities in line with its ‘America First’ policy. This will steer corporations to re-think and out-compete global competition.”
The US is employing several hard line tactics to revive domestic manufacturing; some of these include:
- Withdrawal from the Trans-Pacific Partnership (TPP) with Trump in favor of negotiating bilateral trade blocs
- Proposed renegotiation of or retraction from the North American Free Trade Agreement (NAFTA), with the latter making manufacturing trade more costly
- Proposed imposition of targeted import tariffs on Chinese goods
“While trade policies might drive local manufacturing, there are also risks attached for US exports,” confirmed Frost & Sullivan Emerging Market Innovation Senior Analyst Neha Anna Thomas. “For instance, while high import tariffs on Chinese goods should encourage re-shoring and increase import substitution, it carries the inherent risk of retaliatory tariffs on US exports. Similarly, the US withdrawing from the Paris Agreement will signify a lack of commitment to reducing greenhouse gas emissions and could attract carbon tariffs on US exports. This can potentially raise export prices, affect international competitiveness and dampen demand.”
The availability of infrastructure, strong manufacturing networks and a general positive sentiment among corporations will foster a thriving domestic manufacturing ecosystem. However, the changing policies of the new US government will also force geo-political re-alignments. US might see increased/similar competitive responses from other geographic landscapes. This may cause issues in short-term but would not have a lasting impact.
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