When queried at a 1909 business meeting about the choice of colors available for his automobiles, Henry Ford replied that customers could have any color they wanted as long as it is black. Fast forward to the late 20th and early 21st centuries and consumers today are now in the driver’s seat (no pun intended). Publications such as Consumer Reports, CNET, and a myriad of other independent professional and consumer reviews of goods and services empower buyers, dictating to producers the style, features, and price ranges that consumers seek.
This past month, I had the great opportunity to travel to England, where I taught a seminar session on International Business in a Dynamic Environment in Canterbury. Over the course of four weeks we discussed the many different aspects of International Business with students, and the discussion proved to be both deep and mind opening.
President Trump signed an executive order that will withdraw the United States from the Trans-Pacific Partnership (TPP). The TPP is the largest planned regional trade accord in history, and was designed for the United States and 11 other nations in Asia and the Pacific to build a free trade zone. Its purpose was to lower tariffs, resolve trade disputes, and make patents safe, all while enhancing U.S. power in Asia.
The new administration has fulfilled Trump’s campaign promise, by changing America’s trade ties with other countries, and abandoning the TPP brokered by his predecessor. The withdrawal from multinational trade agreements stems from his belief that they “erode American jobs and opportunities”, and has had large geopolitical implications in Asia, and throughout the world.
Here we go again: The U.S president is attacked on a global scale for his thinking on trade and investments. Mrs. Merkel, chancellor of Germany even announced a “new chapter in U.S. European relations” and stated that “Europe must take our fate into our own hands’’. Similar accusations had been raised in 1980 after the election of President Reagan. He was labelled a B class actor, a cowboy and an inexperienced but lucky vote gainer. The accusers were wrong then and they are wrong now!
President Trump lived up to his convictions during the tense G-7 political summit just as he had already done during and after the U.S. presidential campaign. No surprises there when he reflected on the need for more balanced trade relations and the requirement for all nations to pay a fair contribution for the benefits they obtained from the United States.
The Trump administration is attempting to lower imports in order to rebalance trade after decades of U.S. neglect toward economic relationships around the world. Rebalancing should not only be done by applying the stick of import reductions, but also by export promotion.
Exports make a firm’s markets grow and change its home nation’s currency value. When U.S. exports increase, the dollar typically goes up in value.Shrinking exports tend to weaken the dollar. Exports also shape public opinion of globalization and offer the opportunity for economies of scale.Higher production volume often means a lower cost of production.Since high exports also make imports cheaper, a firm may achieve lower costs and higher profits, both at home and abroad, through exports.