A major part of any President’s legacy is how they handle foreign affairs. Encompassed within the many aspects of international affairs is trade policy. Trade policy includes how we tax imports and exports, regulations on these imports and exports, as well as agreements made with other countries about how trade will occur. This may not be a hot button issue in the current American political landscape, but these important policies help lay the foundation for our own economy as well as positive relationships with other nations.
When it comes to trade, opinions differ among Americans on how free we should keep the market and whether or not we should work with, and how much we should work with, the international community on trade agreements. While trade policy in general is not as clearly divided along partisan lines as some other issues, one can still observe some general policy differences at the party level. In general, American conservatives are more favorable of free trade and free markets than those that are more liberal. This support of the free market could be seen during the George H.W. Bush administration, which lead the push towards the eventual 1994 signing of NAFTA, the North American Free Trade Agreement- a groundbreaking Free Trade Agreement for the United States, Canada and Mexico.
In general, many on the American Left and the Labor Movement are skeptical about extensive free trade agreements and instead adopt Protectionism as a philosophy, being concerned that low barriers to entry for foreign manufacturers allow them to outcompete and harm American production, jobs and the economy. In practice, trade policy in the US has never been quite so clear cut, though, with politicians from Teddy Roosevelt to Donald Trump touting the importance and benefits of Protectionism for the American worker and economy.
President Trump ran a campaign defined by a protectionist philosophy, but since taking office has signaled a less coherent and less strictly protectionist strategy. He has stated a few main objectives regarding trade, all of which fit in with his “America first” approach to policy. The first is to ensure that US businesses in all sectors are able to compete both domestically and internationally. The President also aims to enforce US trade laws to prevent the US market from being distorted by subsidized imports. Many of President Trump’s objectives also include renegotiating or re-evaluating America’s involvement in trade agreements. The President aims to resist efforts by other countries to increase obligations under various trade agreements, as well as update current trade agreements.
Based off these objectives, the Administration has stated four main priorities in terms of trade:
- Defend the country’s national sovereignty over trade policy
- Strictly enforce US trade laws
- Open foreign markets
- Negotiate new and better trade deals
The President likely wouldn’t describe himself as strictly protectionist, but he believes that we are getting the shorter end of the stick on international trade deals like NAFTA, and much of what he said during the campaign was protectionist in tone. During the campaign, for example, he criticized companies like Ford for choosing to build cars in Mexico rather than in plants in the United States. In keeping with this logic, he withdrew from the TPP (Trans-Pacific Partnership) soon after arriving in office. The TPP is an agreement between several countries that border the Pacific Ocean to strengthen economic ties among these countries by reducing tariffs and fostering economic growth. Without US support, the TPP is likely to fail.
In recent months, President Trump has suggested that trade deficits – when the US imports from more than we export to a specific country — with trading partners worldwide are far too high, naming China during the campaign and onward and most recently Germany. The President has espoused the idea that America can become a manufacturing powerhouse in a global economy as long as the right deals are made. To that point, the Administration has signaled its desire to begin talks with Canada and Mexico to renegotiate NAFTA as soon as this fall.
There have been a few inconsistencies in the President’s policy that have perplexed investors worldwide. International markets are struggling to adapt to an Administration that frequently shifts its tone and policies. Two actions of late have shown the Trump Administration seems to be unpredictable when it comes to trade policy. During the G7 (Group of seven advanced world economies) meeting in May 2017, President Trump considered and signed a G7 pledge to defend against protectionism, baffling some back home as his earlier statements and actions on trade seemed to be purely protectionist.
Uncertainty about the particulars of Trump’s trade policy is likely to continue through the next four to eight years. This uncertainty will make it difficult for printers, suppliers, and industry manufacturers to draw any solid conclusions about choices they should make when importing or exporting goods, even just in the North American market.
The United States’ printing industry’s exports are largely to Canada, the UK, and Mexico. For the first and the last, the probable renegotiation of NAFTA and how that unfolds is going to present some major questions and choices for US based Printing companies that export to and do business in Canada. If tariffs on either end become stricter, it’s possible that smaller companies may be priced out of the Canadian market unless they have the capital to set up production facilities in Canada (as many larger companies already have in order to support capacity and efficiency).
With US participation in the Trans Pacific Partnership effectively ended by the Trump Administration, Printing companies in the US with global ambitions will find it harder to enter the emerging markets in South America and Southeast and west Asia.
The Industry’s largest source of imports is China, another country frequently maligned by President Trump for trade and currency practices. While it’s unlikely that the US would raise tariffs on imports from china to the punitive 40% or more that the President suggested as a candidate, such talk and the possibility of even a mild raise from the current level are a cause for concern for commercial printers in the US.
Even in the absence of clear-cut trade policy, the Trump Administration has made it clear that they intend to upend the status quo of international trade. Withdrawal from the TPP and the planned NAFTA renegotiation have served and will serve this intention, but to date it is also pretty clear that severe changes aside from that are unlikely. Still, there is cause for concern for any printers intending on entering the international market if only because of the unpredictability of Administration policy in this matter. It is too early in the Presidential term to determine if policy will follow a protectionist path in the years to come, or if the Administration will take a more unconventional approach to trade.
Immigration has been a contentious issue for decades, and many administrations have struggled to find a balanced policy for allowing new people into the country. This year, the Trump Administration has brought with it some stark policy changes to include immigration. While this can be a controversial topic, it’s important to know how new policy will affect you and/or your business. Immigration change has been a key policy component for President Trump throughout his campaign and into his Administration, and it will likely come with some economic consequences.
The new Administration is starting to push through legislation to help tackle some of their goals. Key campaign promises from 2016 that are currently in the works include building a wall along the US-Mexico border, removing criminal undocumented immigrants, defunding sanctuary cities that shelter illegal immigrants, limiting legal immigration, and tripling the number of US Immigration and Customs Enforcement (ICE) agents.
Additionally, in January 2017, President Trump signed Executive Order 13769 which halted all refugee admissions and temporarily barred people from seven Muslim-majority countries. This Executive Order faced significant legal challenges in its first few weeks, and was deemed unconstitutional after being taken to court by opposing parties. A second draft of the Order was then issued on March 6, 2017, excluding Iraq from the travel ban and including a case-by-case waiver process for refugees from the countries impacted. The Order continues to face legal pushback.
President Trump has seen progress in other areas of his immigration policy. The Administration has largely increased the presence of ICE agents and the number of illegal immigrants being deported. Under President Obama, ICE agents were required to focus on only the most serious criminals. Under President Trump, all illegal immigrants are being made a priority, regardless of criminal background.
The changes being made at the federal level have a significant impact on the United States’ demographics and economy. With the potential for thousands of people leaving the country through deportation and the decreased access for future immigrants, the shape and makeup of America’s workforce is likely to change, specifically in manufacturing — the National Bureau of Economic Research reports that about 890,000 undocumented immigrants work in manufacturing and are also responsible for nearly $74 billion in annual manufacturing output.
In certain sectors, immigrants make up the majority of workers. In agriculture, for instance, foreign-born people are a significant source of labor. According to the USDA, 71 percent of crop workers are foreign -born, and 4 percent are not legally authorized to work in the United States. These numbers may be even higher, as many undocumented workers may be unwilling to reveal their illegal status.
According to a study done by the Partnership for a New American Economy, the reason these numbers are so high is that American workers are unwilling to take these jobs — even in times of economic hardship. The report states, “In 2011, there were on average 489,000 unemployed people in North Carolina and approximately 6,500 available farm jobs offered through the North Carolina Growers Association. Despite the fact that each of these jobs was in or next to a county with over 10 percent unemployment, only 268 of the nearly 500,000 unemployed North Carolinians applied for these jobs. More than 90 percent of those applying (245 people) were hired, but just 163 showed up for the first day of work.” In cases such as these, employers have little choice but to give jobs to immigrant workers.
It is expected that the Trump Administration’s current policy of substantial removal of undocumented immigrants will have a substantial impact on this sector. Agricultural labor shortages would result in higher prices for food, and America would then be forced to import much of its food supply from other countries. There would also be the possibility of food shortages.
Ultimately, the new Administration’s policies will certainly influence the economy as a whole. A decreased immigrant population will result in a loss of labor for many industry sectors. This will, in turn, affect profits for companies in those sectors, as businesses may not be able to yield as much product. American-made products may then become more expensive, especially if there are shortages in any sector due to the labor losses. Americans will start to look elsewhere for cheaper products, increasing the number of products imported from other countries.
It is still unclear exactly how these policy changes might affect the printing industry, or even if many of these policies are going to be put in place — but being aware of current and potential future policy can help businesses prepare for any changes that may occur. By looking at other industries as an example, such as agriculture, we can get a sense for what this might mean for printers. US manufacturers may face labor losses which could increase costs of supplies for printers, and they may also see a struggle to find laborers to work in their facilities.
In the wake of these potential changes, companies should look at their current hiring practices to determine how they might be affected. All employers who hire individuals for employment in the US are required by federal law to complete Form I-9 (Employment Eligibility Verification). This helps ensure that potential hires are eligible to work in the United States. Businesses can also use E-verify in their hiring process, which is a free online system that helps determine the eligibility of employees. As of right now, E-verify is not federally mandated, but a few states (Alabama, Arizona, Georgia, Mississippi, North Carolina, South Carolina, and Utah) have specific laws that require employers to use E-verify. Other states may choose to adopt in the future, and over the past several years, bills have been introduced that would make E-verify a federal requirement.
While the impacts of new immigration legislation will likely be felt industry-wide, you can prepare and protect your business by being aware of the changes that are happening and encouraging legal hiring practices.
SGIA will continue to monitor the impact of these policy changes. Sign up at SGIA.org/FirsttoKnow to receive the most up-to-date regulatory and legislative information about specialty imaging.
On June 15, 2017, the President issued Executive Order 13801, “Expanding Apprenticeships in America.” This Order addresses the increasing costs of higher education as well as the lack of opportunity for college graduates in America. Current federal programs for education and workforce development are widely believed to be ineffective, with many Americans (college-educated and otherwise) struggling to find full-time employment.
The intent of this Order is to expand apprenticeship programs in America and reform these inefficient workforce programs at the federal level. “Apprenticeship” is defined in the Order as “an arrangement that includes a paid-work component and an educational or instructional component.” The Order specifies that the Secretary of the Department of Labor must create a task force on apprenticeship expansion, which will include representatives from a variety of industries as well as educational institutions. The task force will identify strategies to promote apprenticeships and submit a report on their findings. No later than two years from the date of this Order, the Secretary must also establish an Excellence in Apprenticeship Program. This program will collect voluntary information on efforts to implement apprenticeships and recognize those employers or organizations who make these efforts. Finally, all federal agencies must submit to the OMB, along with their budget, a list of workplace development programs, if any, that they administer.
SGIA will continue to monitor the impact of this Executive Order. Sign up to receive the most up-to-date regulatory and legislative information about specialty imaging.
OSHA announced on May 17th that employers will not have to file injury and illness information by July 1 with the Agency. The rule requiring the filing, issued in May 2016, continues to be widely opposed by businesses since the regulation enables OSHA to publicly post injury and illness data from about 466,000 workplaces with 20 or more employees. In addition to the posting of employer data on the OSHA website, employer groups also oppose other provisions of the rule including restrictions of incentive and drug testing programs.
On March 22, 2017, SGIA attended the First 100 Days 2017 Legislative Conference — an event highlighting recent legislative proposals and changes that specifically affect the printing industry.