In the second instalment of Global Finance’s dialogue with former US Secretary of Commerce Wilbur Ross, the focus shifts to how Trump’s tariffs and trade policies affect business leaders and key trading nations like Canada, Mexico, and India. Ross urges CEOs and CFOs to expedite plans for reshoring or nearshoring production, as the era of manufacturing components in multiple countries before assembly in a final destination is nearing its end.
CEOs and CFOs outside the US should also adapt to potential changes in trade policy heading towards protectionism, Ross notes. He stresses that European regulators need to ease restrictions to effectively reshape their trade policies. Ross points out that Trump’s agenda of deregulation and tax reduction enhances the economic allure of the US, making it compelling for companies amidst tariffs.
Although a lag in infrastructure development can be expected due to new tariffs, Ross reassures that many US industries are under-utilising their capacity. An increase in production could offset some tariff costs, and currency fluctuations will significantly influence global industry performance. He warns European businesses of potential adverse effects from rapid interest rate adjustments that could harm their imports while aiding exports.
When it comes to tariffs, Ross emphasises that while some industries like pharmaceuticals may not benefit from higher tariffs, the automotive sector could see benefits from current tariffs due to the rules of origin affecting operations between the US and Mexico. Despite the apprehensions tech manufacturers might have, Ross believes that the European tech landscape is currently lacking compared to the US.
Looking at export-oriented US industries, Ross explains that while some apparel imports may survive tariff implications, the long-term goal of tariffs is to encourage global partners to lower their own tariffs. He points out high tariffs from India and underscores Prime Minister Modi’s potential to enhance India’s industrialisation efforts, suggesting that improved infrastructure could enhance competitiveness. Additionally, Vietnam stands to gain from shifts in production away from China, although its growth remains moderated by its smaller economy.
In his discussion with Global Finance, Wilbur Ross highlights the effects of Trump’s tariffs on US business strategies and trade partners. He advises CEOs and CFOs to accelerate reshoring plans and warns European companies about regulatory challenges. He identifies potential gains in US automotive sectors while discussing the dynamics between India and Vietnam amidst these trade policies.
In essence, Wilbur Ross conveys that US tariffs are shifting manufacturing strategies towards reshoring and solidarity with North American trade partners. CEOs must adapt to these changes while navigating an evolving global landscape, particularly in Europe where deregulation is crucial. Despite initial disruptions, Ross emphasises that companies might find relief through increased production and strategic shifts as these tariffs aim to foster competitive trade practices globally.
Original Source: gfmag.com
