The new economic model for the United States is taking shape, and it’s largely being fueled by a globalization backlash.
Globalization has produced unprecedented wealth and unleashed incredible productivity that’s powered economic growth for generations. Unfortunately, the less-flattering elements of globalization, such as outsourcing jobs to countries where labor is cheaper, has greatly affected American employment.
Regular Americans, especially in the Rustbelt, are outraged over the perceived damage globalization has inflicted on their communities in recent decades. The promise to shake things up and put America first is what laid the groundwork for our new administration. Now, President Donald Trump must act on his major campaign promises to make “better deals” with our trade partners.
Big companies that depend on global trade are holding their breath as they await major changes to our national trade policy. As Trump lays the foundation for an America-first trade paradigm, big-wig CEOs from corporate America are positioning themselves to remain profitable throughout this epic trade transition.
Adapt or get left behind
Jeffrey Immelt, the CEO of one of America’s most iconic companies, is bracing for the impact of this major shift in trade policy.
He’s at the helm of General Electric, a diversified multi-purpose company whose divisions span many industries such as healthcare, financial services, aviation and engineering. They’ve been in business for more than 100 years and have weathered significant challenges, constantly positioning themselves for success amidst political and economic storms.
In a letter to investors, Immelt points out that “We’re in an era when some very basic assumptions about the global economy are being tested — an era when trust in big institutions is so low that the most valued ‘strategy’ is simply change in any form.” This is a very straightforward way of pointing out how populist anger has transformed our political scene.
Immelt believes that the United States is “diverging from the rest of the world,” and as result, “will be less of leader in trade.”
Awkwardness for some
Naturally, multinational corporations such as GE find themselves in an awkward spot because their profit model depends on their worldwide reach and globalization-friendly trade policies.
It’s no coincidence that GE has avoided being caught up in Trump’s Twitter wars that target companies who move jobs abroad, such as General Motors. Instead of fighting the current political tide, they are aggressively adapting to our new political norms. “GE is filled with business leaders, not philosophers,” the company told their shareholders.
Immelt paints a picture of a GE that’s evolving with the times by “building a culture that is simpler, faster, and more accountable.” While radical reversals in trade policy may be bad news for GE, the new administration is promising some overhauls that may help bolster this big company’s bottom line.
Embracing the mixed bag
The regulatory reform that’s been promised by the Trump Administration is something that’s exciting the business community and helping counteract the worries of trade wars with our partners.
Immelt has high praise for the administration when he references “stripping away years of bad regulatory and economic practices to promote competitiveness.” Studies show that the tsunami of government regulations that business faces have slowed economic growth dramatically in the United States.
Immelt recognizes that smart regulatory reform could help bring healthy levels of economic growth back to American life.
Welcome to the Wild West of trade policy
What does our new national trade policy look like? The reality is no one really knows which way the Trump Administration is headed on that front. For now, captains of industry such as Immelt are trying to adapt with the times and make sure they’re not blindsided by the changing trade landscape.
Look for other CEOs to fall in line with the new normal of America-first trade policy. They’re going to compel the administration to inspire confidence through regulatory reform, to help limit the fallout from protectionist trade policy.
As we depart from our longstanding commitment to globalization and free trade, we can only be sure that we’ll see some massive disruptions in the business world.
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