The United States is home to one of the world’s largest economy as measured by GDP. Impacts on the US economy have implications for the global trade economy, requiring those engaged in international trade to keep tabs on both US political and economic events. Arguably one of the most important of such events is the US presidential election.
Election years have a unique impact on the US economy due to leadership changes that result in new trade and economic policies, in addition to the fact that election periods are times of uncertainty for corporations and consumers alike. Furthermore, the current COVID-19 pandemic is piling additional stress and uncertainty onto an already tumultuous time. This begs the question: What impacts will current events have on international trade?
New Leaders, New Policies
One of the primary platforms upon which US presidents run their campaigns is their plans for managing foreign trade policies. As has been witnessed with the current presidency, a change in leadership for the US can mean a massive shift in the economic giant’s approach to global trade. New tariffs or even outright import and travel bans are not out of the question when the reins of government change hands or even during pandemics.
COVID-19 quarantining and social distancing policies have already resulted in many operations shuttering their doors while others are drastically paring back their workforce. This has created a particular strain on the logistics industry. Experts are concerned that government responses to the COVID pandemic could result in food insecurity in many parts of the globe due to “[b]order closures, movement restrictions, and disruptions in the shipping and aviation industries...”
Paying attention to presidential likelies and their respective policy plans can give you an idea of what changes may be on the horizon. Newly elected presidents are often eager to deliver on some campaign promises which can result in rapid changes. However, as in the case of President Trump’s USMCA trade deal, not all new policies necessarily result in massive shifts. This emphasizes the importance of being prepared for change while avoiding overcommitting to adjustments for changes that have yet to occur.
Confidence Impacts Consumer Behavior
The second factor brought on by election years, compounded by the current global health crisis, public perception and uncertainty are considerably more difficult to anticipate. As evidenced by history, uncertainty has proven to have a massive impact on consumer behavior. This is especially the case during times of financial crisis like the one the world is currently facing in light of the COVID-19 pandemic.
Rising unemployment creates financial insecurity, and consumers tighten their purse strings as a result. Spending has increased for necessities while the luxury goods market has taken a heavy hit. This is evidenced by the way most US citizens leveraged the $1200 stimulus they received from the government for paying off bills and buying food and gas. The net result of these changes is a heavily dented international trade market.
Nearly every economy around the globe is feeling the impact of COVID-19 tremors. Uncertainty is peaking around the world as companies and governments consider the implications of massive shutdowns due to social distancing policies and changes in consumer tendencies. The questions of how and when businesses will be able to return full force are on the minds of people in every corner of the planet.
No one knows exactly how any presidential election will turn out. And no one can say what the world will look like on the other side of the COVID-19 pandemic. What is certain is that now more than ever is a time for planning. Times like these are survived by businesses that explore every option available to them. Contact us today and see how we can help your business navigate through these trying times.