Will Donald Trump’s presidency be good for retailers?

Discussion
Photo: Getty Images
Nov 11, 2016
George Anderson

Days after the conclusion of arguably the most divisive campaign in U.S. history, in which one candidate won the popular vote and the other the Electoral College, retailers are left to wonder what a Donald Trump presidency will mean for their businesses.

To support or oppose Mr. Trump’s agenda is complicated by the fact that his candidacy mostly centered on the man himself and lacked policy specifics on issues important to retailers. Groups representing retailers are hopeful the new administration will seek pragmatic solutions to challenges on a variety of important issues.

International trade – Mr. Trump has criticized trade deals he maintains has cost Americans jobs. He has pledged to renegotiate past agreements and to slap tariffs on goods imported from nations such as China that he believes are undermining U.S. businesses. The National Retail Federation (NRF), which supports the Trans-Pacific Partnership (TPP) pact championed by the Obama Administration, estimates the deal would “boost U.S. spending power by more than $1,000 per household.” Mr. Trump wants to rework TPP, if not scrap it entirely.

Immigration – Mr. Trump has pledged to build a wall on the nation’s southern border and institute a ban (size and scope TBD) of individuals coming to the U.S. from Muslim nations. Fulfilling this pledge may limit top talent emigrating to the U.S.

A recent story of a Fulbright Scholar-winning data scientist sending his wife and children back to Pakistan after their seven-year-old son (an American citizen) was allegedly bullied at school for being Muslim is an example of an anti-immigrant mood found in parts of America. It should be noted that local authorities have been unable to verify the family’s claims at this point.

Infrastructure – Mr. Trump has pledged to support massive new spending to rehabilitate America’s crumbling bridges, roads, tunnels and airports, infrastructure vital to retail industry performance. NRF supports infrastructure investments and plans to lobby for “a multimodal national freight policy to smooth the movement of retail cargo from ships to trains to trucks.”

Taxes – Candidate Trump called for lowering corporate tax rates from 35 to 15 percent while eliminating some of the deductions now taken by businesses. It’s unclear, at this point, if that would eliminate deductions on imports that are seen as favorable to retailers.

DISCUSSION QUESTIONS: Do you expect retailers to benefit from Donald Trump’s presidency? What issues related to the retail industry, whether covered in this article or not, will be most important for the new administration to address?

Braintrust
"Campaigns are hype. Every past president has fallen far short of campaign promises, so time will tell what, if anything, will come to be."
"We’ve never had a branded president before."
"Proposed civil rights violations have terrified U.S. citizens and the terrified don’t spend money."

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33 Comments on "Will Donald Trump’s presidency be good for retailers?"

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Ken Lonyai
BrainTrust

Campaigns are hype. Every past president has fallen far short of campaign promises, so time will tell what, if anything, will come to be.

Nevertheless, if everything were to be enacted and Chinese imports diminished, shelves would not go barren. American manufacturing would fill the void at nearly the same price points if the opportunity were presented. If immigration were curtailed, 320+ million people would fill jobs and keep up buying, especially now that more states have raised the minimum wage.

Gene Detroyer
BrainTrust
Over 85 percent of American manufacturing jobs have been lost to productivity. 2016 will be a record year for U.S. manufacturing. It has doubled since 2000 and increased sixfold since 1985. Yet, from 2000 until now, manufacturing jobs have declined by over 35 percent. If tariffs are put on imported goods, those tariffs are not paid by the companies, they are paid by the consumer. The cost of living will increase substantially. If U.S. companies decided to manufacture particular goods, they will use the tariffs as price protection. The price point will not go down. And why will they manufactur in the U.S., when 95 percent of their customers are outside the U.S.? General Motors’ biggest investments are in China, not because they are going to bring the cars back to the U.S., but because the U.S. market pales by the size of the Asian markets. A bit over 50 percent of the revenue of the S&P 500 is out of the U.S. Close to 66 percent of the Dow Jones 30 revenue is outside the U.S. Some of the DJI companies have 80 percent and 90 percent of their revenue from outside the U.S. The manufacturing jobs are not… Read more »
Ken Lonyai
BrainTrust

Gene — I’m guessing you’re disputing my opinion by the facts you culled. And FYI — I’m a former manufacturing engineer that worked in the metals industry, so I’m very familiar with the effects of automation on those jobs.

If the U.S. economy totally tanks as a result of administration policy, retail will be one of many victims. But before brands/manufacturers shutter operations because they can’t peddle products at tariff-matching prices, they will find ways to deliver the cheap goods Americans are addicted to. It’s survival with a bit of disruption thrown in.

Lower-tiered jobs are unlikely to rebound in manufacturing no matter what the economy does and that’s not something I implied. Higher minimum wages make retail more attractive and allows a little more workforce retention for merchants. And if the economy stays stable, especially if the hype (from someone who never negotiated a national trade agreement) blows over or is minimal, those making slightly more livable wages will be spending and not saving.

Nevertheless, until 1/21/17 everyone here is stating hypotheticals based on campaign rhetoric.

Gene Detroyer
BrainTrust

I don’t dispute your comments. What I emphasize is that tariffs and perhaps trade wars will hurt the economy. It will increase the cost of living and will not produce new jobs. That is not speculation, that is based on decades of data.

Today more than ever, tariffs will encourage global companies in the U.S. to move even more operations out of the U.S.

Dick Seesel
BrainTrust

I’m trying to set aside ideology here, because the split verdict on the election leaves voters uncertain on both sides. Will Mr. Trump live up to his harshest platform promises or try to moderate his views? Today, nobody knows whether the answer to that question will chill fourth quarter sales or stimulate them.

So the only way to answer this over the long haul is to look at the economic impact on consumers. Tax cuts and infrastructure spending are good for businesses and consumers but (on the other hand) protectionism and tariffs will lead to higher prices. And any effort to restrict (or reverse) immigration patterns will stall the population growth that our economy depends on.

Finally, the plans to “repeal and replace” the ACA may have a huge impact. On one hand, lower costs benefit consumers and small businesses; on the other hand, if millions lose insurance coverage they will face an economic threat that will crimp their spending for the foreseeable future.

Frank Riso
BrainTrust

I think it is way too early to tell but I do think he will be good for retailers in many ways. Reducing taxes could result in more money to grow and hire more staff. Also if he follows the law completely on immigration we could see more employment for retailers. If he keeps to his promises we are going to see many changes and some will be good for retail and some may not be. As I said, it is too early to tell so let us wait and see.

Mark Ryski
BrainTrust

Retailers like every other business will need to wait and see what impact Trump’s policies will actually have on their businesses. While a number of his policies like trade, for example, appear to be net-negative for retailers, it’s not a forgone conclusion that they ultimately will be negative. And, since Trump has not been completely aligned with the GOP on a number of issues, it’s unclear what the final policy outcomes will be. What I think we can say for certain is the future will be relatively uncertain — and uncertainty is never good for business.

Cathy Hotka
BrainTrust

I live in Washington DC, where the new conventional wisdom (after the deep shock of the election) is that Trump will not actually do any of the things he promised. Massive tax cuts, combined with huge new infrastructure programs, tens of billions in cash for an already swollen military, and impactful trade wars would have unmistakable effects on our national debt. It will be interesting to see the next State of the Union address, to say the least.

Jasmine Glasheen
Guest
Jasmine Glasheen
9 months 9 days ago

In times like these customers are more concerned with saving for their (and their children’s) future than spending. When America is in political upheaval people aren’t concerned with buying clothing. Furthermore, the high tariffs on imports will curtail the American economy.

From my involvement in apparel trade shows, I can tell you the proposed deportations would completely shift brand dichotomy. A huge percentage of exhibitors at the OFFPRICE Show are immigrants.

To appease investors, Trump has also pledged to go forth with the Dakota Access Pipeline. Temporarily this may, as he says, create more jobs. However, the protests and polarization that result from polluting native land will be more harmful to commerce as a whole.

The following reflects my opinions and not those of my employer: The new administration would be wise to assure all Americans that we are safe under Trump’s regime. Proposed civil rights violations have terrified U.S. citizens and the terrified don’t spend money.

Paula Rosenblum
BrainTrust

Amen.

Herb Sorensen
BrainTrust

So which will help retailers more, giving the government more money to continue an explosive growth of regulation and government management of society, or moving the needle the other way, with businesses and SHOPPERS controlling more of their own money? Duh! The confusing thing is why in a free America this question would be confusing.

Lyle Bunn (Ph.D. Hon)
BrainTrust

Retail success is based largely on consumer confidence and ability to spend (including credit-worthiness) which drives investment in innovation and marketing. As physical retail struggles to implement omnichannel strategies and faces competition from online, brands and retailers will benefit from the traffic and conversion that that consumer confidence and enabling tools support. Nothing is holding back consumer spending except their confidence in the the future, and nothing is holding back retailers except their own innovation.

Shep Hyken
BrainTrust

There are a number of issues on the table, but I’ll only address one. Typically, the fiscally conservative (as in Republican) approach has favored business. I think we’ll see more favorable decisions made that will help business in general.

Al McClain
Staff

According to Forbes (not exactly a left-leaning publication), that is not true. Business Insider reaches the conclusion that the stock market does better under Democrats. I realize that the market does not exactly mirror business as a whole but it’s an indicator.

Herb Sorensen
BrainTrust

Don’t know about that, but the stock market immediately hit an all time record with the election of Trump.

Carol Spieckerman
BrainTrust
Looking at Mr. Trump’s presidency from a literal “policy” perspective would seem to be dicey given his bouts of rebellion and ongoing contradictions, not to mention the sway that others will certainly hold once his administration is in place. The jury’s out on this (perhaps literally but that’s another discussion). The most interesting dynamic is the shift in the Trump brand both literally (actual Trump-branded stuff) and figuratively (association and affinity). As I commented in a recent media article, there may be no such thing as bad publicity but there is such a thing as being out of alignment with your fan base. Trump’s new, and perhaps unintended, fan base is the “non-college-educated white males” we keep hearing about. His historic targeted fan base is higher-end consumers and partners who are willing to pay a premium to license the Trump brand and produce products and erect buildings emblazoned with it (licensees, the ones that have largely been left out of the Trump brand conversation yet have a lot at stake). Ivanka of course has a big stake in the outcome of this shift as well. For now, many of those high-end partners and customers are fleeing and showing the hand… Read more »
Ed Rosenbaum
BrainTrust

How can we know or predict what will happen after this tumultuous campaign period? Did we ever expect Mr. Trump would win the party’s nomination let alone the presidency? Have we ever seen protests like this after an election in our country? I don’t think Mr. Trump knows what he will do. He has talked the talk. Now it is going to be the time to walk the walk. His first priority is not retail; it is unification.

Dick Seesel
BrainTrust

Agreed, and some of the names being floated for key jobs (Steve Bannon of Breitbart for chief of staff, for example) are likely to have a chilling effect on many of those who didn’t vote for Trump but would like to give him a fair chance to succeed.

As to Cathy Hotka’s observation (above) that the conventional wisdom in DC expects Mr. Trump to do nothing that he promised … how did the conventional wisdom work out on Tuesday?

Manmit Shrimali
BrainTrust

Let’s look at the demand and supply side and then plot them on the third dimension of short-term and long-term.

Given the hope (false or true), 60% of blue collar Americans are likely to spend more at least in the short term hoping for a rise in the minimum wage. It would be a big mistake on the part of retailers to consider what happens in the next three months as a conclusive trend. Sentiments and hopes would be the key driver of sales in next three months. There is a massive uncertainty in the long run — if cuts in corporate taxes are underwhelming, it would backfire across the board.

Al McClain
Staff
In a word, no, this will not help retailers, in the short, mid or long term. Remember, the U.S. Chamber of Commerce opposed him for a reason. Trump now has a puppet House, a majority Senate and will control the Supreme Court if he gets “lucky” and one or two of the older liberals pass away. Meanwhile, the steel jobs are not coming back and the ruin the industry left behind will not be repaired. Infrastructure may be built/repaired, but he has vowed to privatize that so it will be done at the cost of tolls on new and maybe existing roads. The poor will have less spending power as the tax cuts will not affect them. And the one percent will mainly invest their tax breaks. Huge corporations will become more monopolistic, as Trump is already appointing corporate lobbyists to his team. There is a good chance he will pursue anti-trust actions against Amazon, because he does not like Jeff Bezos and retribution will be coming for those who opposed him. Finally, there could be unrest in the streets as he implements his more Draconian plans. As David Gergen, a respected analyst, said, we are in for a rough… Read more »
Ben Ball
BrainTrust

Al, I am not surprised by your perspective — but to be fair, isn’t the RW staff always telling us to check politics at the door? (Which is PRECISELY why I have stayed out of this discussion by the way. As you well know, my views are dearly held and difficult to repress once my fingers hit the keyboard!)

Have a good day and join me in collectively hoping that this all works out OK. Just like we did in 2008.

Al McClain
Staff

Hi Ben, Always good to get your perspective. I am not a writer nor editor (though I write some discussion stories), but a partner in the business, and I do have opinions. We wrestled with whether to run this story because of the politics involved, but opted to do so since we viewed it as an unprecedented (at least in the last 15 years) seismic event. In reviewing my comments, I tried to obey our “golden rule” and focus on the announced plans and well established intentions of a Trump administration, especially as they may effect consumers and retail. My opinions may be wrong, and are only my own, but as RW staff now has “BrainTrust” privileges to comment (overdue IMO), I wanted to weigh in. Hope you are well and feel free to share your views.

David Livingston
Guest
9 months 8 days ago

All depends. The economy is always good all the time for good retailers. If you are a bad retailer, then it doesn’t matter who is president. If you are a good retailer, it doesn’t matter who is president. Good retailers adapt. Bad retailers will find reasons and scapegoats for their failure.

One thing I do know is Ireland is really scared right now that many U.S. companies will repatriate their profits back to the U.S. if taxes are lowered. However what candidates say they will do is a lot different than what really happens. They campaign on the right or left but govern in the middle.

We are not going to do anything with our immigrants unless they are actual criminals. We need immigrant labor in agriculture and there are massive labor shortages already. Every farmer in the country had a Trump sign out front and if they thought for one minute the Donald was going to force them to let the apples rot on the trees, they would not be supporting him.

Brian Kelly
Guest
9 months 8 days ago
For retail, the only issue that matters is wage stagnation and job loss. I think you will find that where Trump’s support is coming from is where most retail stores and malls are being shuttered. Trump reinforced the perception that trade deals eliminated low-skill jobs in the U.S. It’s only part of the issue. Over the past 20 years, productivity initiatives have eliminated jobs whether they are moved off shore or technology has replaced them. That opinion is supported by economists across the political spectrum and it is documented in a variety of books. Beginning with Charles Murray’s “Coming Apart” and by Michael Moore’s “Roger and Me” through to more recent titles: “The Unwinding” or “Hillbilly Elegy.” The Rust Belt Democratic strongholds flipped this election. These shoppers have not had a pay increase in over eight years. The stagnant minimum wage is a part of this as is the 50 percent reduction in Union membership. Here the industry is conflicted and rightly so. Payroll directly impacts profitability. And now with the growing importance of in-store experience, front-liners need to be highly motivated to provide positively memorable service. Unfortunately bringing manufacturing jobs back is no small feat. Those factories and mills… Read more »
Jerry Gelsomino
BrainTrust

I am impressed by innovation looking toward the future and dismayed by attempts to “bring back the good old days.” Retail in the days ahead must think creatively and outside the box to survive and grow. The election exposed a popular movement to set things back. I think globalization helped retail. The opposition felt they were left behind by it, but like the cheap cost of goods. During the election Trump catered to those individuals so that he would get elected.

We don’t know what the President Elect will do, but he has not demonstrated the ability to seriously consider all the options. That will make his presidency bad for retail.

Vahe Katros
Guest

Some quick thoughts:

  1. For store based retailers, Infrastructure improvement projects may cause some yuge traffic issues – that might lead to less trips to the store or more ecommerce.
  2. But a deregulated environment may lead to autonomous vehicle approvals so retailers may be able to leverage that technology to bring the store to the shopper.
  3. Some new retail brands may be born: a. Made in America, b. Made in California, c. Bi-Coastal Brands, d. Heartland Brands, e. Main Street retailers selling to newly revitalized central states.
  4. Look for increased home improvement spending in formerly depressed rural areas.
  5. Unfounded privacy concerns over Peter Thiel/Palantar algorithms will drive Millennials offline, causing a resurgence in “reality based” living.
  6. Legalized cannabis states will create new lifestyles — that will be worth watching (or at least observing deeply).
Kai Clarke
BrainTrust

The hype and puffery of a presidential campaign are tremendous and obvious, especially this one. For now, any guessing would be foolhardy. We just have to wait and see.

Adam Simon
Guest

If President-elect Trump thinks that running the US is like running a corporation, then the US is in for a difficult time. Politics is the art of the possible and he will have to learn to accommodate his strongly held views with other vested interests. Conflict will lead to uncertainty which will lead to lower consumer confidence and will be bad for retail.

He could learn from the style of Margaret Thatcher, the so-called Iron Lady. She was tough but she knew how to make compromises — she conceded to the miners (all powerful union interest) who had undone the previous Conservative Government, and then, having stocked up one year’s worth of coal reserves at power stations, she took them on. Only at the end of her career did she lose her instinctive political flair. Trump has undoubtedly got a populist flair, but I am not convinced that he will be a successful politician. It is amazing to think he is in the highest office in the world without ever having served in any political role!

Craig Sundstrom
Guest

Hard to say, obviously, with no track record and little specific proposals … or at least consistent ones. I expect we’ll see a lot of things that are superficially or initially positive — tax and regulation wise — but in the long run will be harmful.

In short, I see little upside and downside ranging from minor to disastrous.

Mark Heckman
BrainTrust
It is true that many of the manufacturing jobs that have been lost are not coming back for a variety or reasons, however, anyone who thinks the trade agreements we are currently operating under are working to the benefit of the U.S. are sadly mistaken. With that said, workforce education and preparedness for the changing requirements of employers is extremely important and must be part of any labor recovery plan. Negotiating better deals is only one component of an economic approach that is geared to drive 3%-4% GDP growth. Something that the current administration cannot even fathom. Much more is begging to happen: A plethora of Executive Order regulations that will be erased on the first day of the Trump administration will serve to be an initial positive shot to the business environment. Repealing the ACA and replacing it with something that actually rewards competition and cost reduction will also be boon to small business growth and accordingly to retail. Lowering the corporate tax rate and the repatriation of more than a trillion dollars in off shore corporate investment, will lead to more companies investing on shore in expansion and job opportunities, yielding more disposable income to be spent at… Read more »
Roger Saunders
BrainTrust
As a fan of Milton Friedman economics, I’ll go along with this University of Chicago, Nobel Prize winner’s thinking on how economies grow. If the U.S. Economy adds a 100 to 150 Basis Points to the dismal performance of the past 8 years, retailers will be winners. Friedman taught that economies grow by: Mutually beneficial trade Productive infrastructure expansion Business investment Consumption The new Administration needs to embrace Trade. As we finalize the TPP and bolster the Nafta trade agreements the economy will grow, and America’s position on the world stage will be enhanced. The President-elect has talked of the need to invest in infrastructure. Congress should support him in this regard. The business community has been justifiably skittish about investment, as they have been uncertain about over-regulation from Washington D.C., unclear about the costs of health care expense, gun-shy about EPA, FCC, FTC, and other government agency rules, not to mention the thought that rewriting the Tax Code was off the table. They should find, if not a benign, then a more friendly government bureaucracy with which to work. That’s good for retailers. With two-thirds of the U.S. economy tied in some way to consumption, the fourth leg, which… Read more »
Tony Orlando
BrainTrust
I am finally getting into this discussion, as it already is polarizing to our panel and guests. In my opinion, the election was not as surprising to me, as others. I follow politics like a fantasy baseball league person, and I was taught by both my parents to be a critical thinker, so let me indulge for a minute. We are a very, very divided country right now, as one half of us are very productive citizens, who go to work every week trying to make a difference, and provide for their family. The other half is led to believe that capitalism is inherently evil, because they haven’t received the share of the pie, and somebody, which is the government, must tax the earners big time in order to provide them with social justice in the form of enormous entitlements. Thomas Jefferson warned us about the power of too much government control of our lives, and now today we have a problem so huge it may be almost impossible to solve. We have unfunded mandates, plus our national debt that is a staggering 110 trillion dollars, and just tinkering with small ball ideas will only sink us further into the… Read more »
James Tenser
BrainTrust

$19.8T.

wpDiscuz
Braintrust
"Campaigns are hype. Every past president has fallen far short of campaign promises, so time will tell what, if anything, will come to be."
"We’ve never had a branded president before."
"Proposed civil rights violations have terrified U.S. citizens and the terrified don’t spend money."

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