Skip to main content

Handfield's 2017 SCM Predictions: Impact of the Trump Presidency on the Supply Chain

OK, so Trump won, Clinton lost.  Get over it, it’s a done deal.  Time to move on, and figure out what this means in terms of how the global economy will be impacted, and in particular, how the supply chain will be impacted.  In general, it’s fair to say that things won’t be as bad as people thought they would be the day after the election.  Part of the reason for this is that Trump has scaled back mostly on 8 of the 10 promises he made during the election campaign!  There may therefore be hope, and the markets and industry leaders visiting him at Trump Tower today seemed to think that things might pan out.

On the plus side, Trump is planning to spend a lot of dough on infrastructure, including highways, ports, airports, farm to market channels, and other areas that could benefit logistics managers.  Oh and pipelines, which are easily the safest way to transport natural gas, which also burns cleanly….(although it is volatile when carried by rail car!)  Our infrastructure has been burdened for far too long without investment, and Trump is promising to fix that.  He also has promised to ease up on the banks, scale back Dodd Frank, and this could free up more money to lend as reserves come down, which could generate a boost to the economy.

On the down side, it costs money to build big projects.   And Trump is saying he wants to cut taxes, lowering the tax rate for corporations to incent them to come back, as well as lowering the tax on high wealth individuals.  Let’s see….spending more, cutting taxes…hmmm… that sounds like generating debt!  And with the Fed raising interest rates earlier today, that debt is going to be a whole lot more expensive as the interest payments go up.  Obama created 9 trillion in debt over 8 years, but that was with low interest rates.  Just imagine what it will look like with high interest rates!

I’ve tried to weigh off these pluses and minuses in a recent video I produced recently.  I’ve tried to make a few predictions for supply chain managers as we think about these events going into the new year…