How the Trump presidency might affect the global fastener and tool industries

Today it was confirmed that America’s 45th president will be Donald J Trump and speculation has now begun in earnest on how the news could potentially impact on trade – and the fastener and tool industries.

While currency and investment markets are experiencing a predictably volatile day as they react to the news – though perhaps not quite as volatile as expected – Trump’s policies, if enacted, appear to have significant implications for the fastener and tool trades.

Free Trade

On the one hand Trump has pledged to fight for free trade, but his own list of trade policy points indicate a marked change in the way the US does business with other nations.

Plenty of headlines have been generated over Trump’s combative attitude to neighbouring Mexico, but the President has often expressed dismay at other countries taxing exported goods. “When they sell into us, there’s no tax,” he has said.

Asia is said to be most at risk. On goods exported from the Far East, which for the time being at least is the heartland for manufacturing in the industry, a 45% surcharge has previously been touted. If this were to come to fruition the ripple effects on currency and trade around the globe could be enormous.

A Nomura survey of investors, titled “Trumping Asia” analysed which regions would be most at risk on a Trump presidency. 75% of respondents expected the US to impose steep tariffs on exports from Asia. 77% expect the US to brand China a currency manipulator – arguably a low percentage considering that it is actually listed in Trump’s seven-point plan for trade.

Is this important? Sure it is, China was the US’ largest partner in trade last year with around $620 billion in business completed in 2015. Number two on the list is Canada and third, Mexico, worth around $540 billion and $500 billion, respectively. Should trade with the US’ top three customers be restricted, expect that to have significant knock on effects around the globe.

Trump has pledged to withdraw the US from the Trans-Pacific Partnership, an agreement signed only in February, linking 12 Pacific Rim nations to business said to be worth 40% of the global economy. The deal is still awaiting ratification and the US could still withdraw.

While it’s impossible to predict with any certainty what Trump’s Presidency will mean for the industry in practice, should all his pre-election pledges become reality then the impact on exports and industry will be significant.

Year to date trade with the US.

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