The Disruptor, How the Trump administration might affect North American trade and Canadian print
Donald Trump speaking at the Conservative Political Action Conference in 2011 (photo by Gage Skidmore).
Decades ago an older gentleman wandered into the foyer of a five-star hotel. He was carrying a shopping bag and dressed in less than appropriate garb for such an establishment. He asked for a room. The front desk clerk, assuming him he was a bum, suggested he try another hotel down the street. The bum, however, owned the hotel property. Looks can be deceiving. Some of the richest people in both Canada and the United States are seldom seen or heard.
They do not make anything, build our roads or habituate the world of graphic communications. But they do rent space to those who manufacture or sell products and services. Somewhat likened to an iceberg, most of the wealthy exist below the waterline of awareness. Hundreds of millions of square feet hardly noticed and owned by this group of the faceless wealthy. Then there’s Donald Trump.
The results of the Bataan death march referred to as the never-ending U.S. election, shocked a great many people. Lots of hand wringing and mea culpa moments ensued. But it was too late. America had in fact elected Trump as its 45th President. He had campaigned on a clever platform: The world is falling apart and dragging America down with it. Too many immigrants from the wrong countries, unfair lopsided trading practices that put American industry at risk, and so on. The plan worked and America found itself at war – with itself.
Unlike his often silent, low-key brethren of real estate, President Trump enjoys the limelight. He craves attention and respect. There also seems to be zero commonality between himself and the average American $24 per hour factory worker and, as surprising as it seems on the surface, these workers were one of the key reasons Trump now holds one of the most powerful positions in the world.
It is difficult, if not impossible, to explain what drives Trump, and even harder to support his many rigid viewpoints, except to say that some of it has to do with his involvement in the construction industry in New York City. Sitting across from mid-level bureaucrats that have the ultimate power over what can or cannot be built plays a role in his aggressive behaviour. Having his own name attached to properties belays a need to protect it. One assumes Trump blows himself a kiss each morning when he shaves.
It can be said that Trump’s business views have changed very little since he pushed himself into the limelight of the highest office in the land. The books he is said to have written are nothing more than grandstanding and one fears Trump himself believes every word of it. “I alone can fix it” summarizes extreme narcissism and bills him as a neo-fascist.
Trump sees government agencies as wasteful and incompetent – getting in the way of free enterprise. He did build his own brand, however, and brought up his children to business leaders in their own right, and all the while being mostly alienated from the aristocrats and old-money movers and shakers. Few wanted anything to do with a brash newbie with such radical views of society. This is why his campaign was so amazing. Trump created a crisis and drew lower- to middle-class white males and small business owners into his web.
Recent gaffs such as the ban on seven select Muslim-majority countries from entering the United States plays to the right-wing hardliners who are also among his strongest supporters. Trump’s position is nothing more than a red herring and he knows it. There are many faiths within Islam. Ismailis for one are an excellent example of why Obama’s separation of extremists and terrorism is so important. One needs only to recall the bloodbath in Northern Ireland, between Catholics and Protestant, to know that wars are primarily caused by two factors – economics and religion. Man’s character cannot be justified by religion: we are all capable of doing bad things. God has been just a good excuse for war.
If we elect people solely on character, legislatures would be virtually empty. But President Trump with all his obvious flaws has one attribute that may pan out especially for manufacturers. I’ve spoken to quite a few American printers – from all regions. The majority suggest the same thing. They support Trump because he will disrupt the status quo of government and be a pro-business President. You cannot argue with that even though some realities of bringing manufacturing back to America may mean they will be buying $10,000 refrigerators and paying much higher costs for labour-intensive products.
The Trump message to industry is quite clear. Cut out the red tape, impose tariffs on a variety of imported products, all to make America great again. U.S. printers can buy into that because if the plan actually works the result will be more printing being produced in America. The Mexican upheaval is really a US., Japanese and Korean manufacturer’s issue more than it is a Mexican one. Goods assembled or made in Mexico are for non-Mexican corporations – with a majority being American. In the 1980 movie The Formula, a film about a secret synthetic fuel that would render oil obsolete, there is a scene between two oil company executives: Arthur Clements: [proposing that Titan Oil can raise its gasoline prices] the people will accept the 12 cents now because we can blame it on the Arabs. Adam Steiffel: Ah, Arthur, you’re missing the point, we are the Arabs.
The largest U.S. corporations are global. The movie showcased what we all sort of know. America Inc. is the puppeteer. Mexico (the country) is the one taking all the flack. The first commandment of free enterprise speaks of making products cheaper. Countries like Mexico are essential to maintaining a low-cost environment. Jobs are disappearing simply because of technology and both Canada and America need a low-cost producer in their own back yard, just as the rest of the world’s continents have access to such countries.
The printing industry on both sides of the 48th parallel can benefit from Trump’s hacking away at red tape and forcing more factories to open up in the USA. Tariffs alone, if implemented by Congress, could invigorate rustbelt towns all over the United States. But there will be losers and Canada will have to work hard to keep itself out of Trump’s crosshairs.
If Trump has his way in removing the so-called tax imposed on manufactured goods made and exported from America, this could cause severe indigestion for, among others, Canadian printers. We faced difficulties like this in the late 1960s and early 1970s. After all, Canadians enjoy exemptions on exported items so the likelihood of the Republicans agreeing on similar schemes is not a stretch.
In 1994, when NAFTA was enacted, there were many Canadian naysayers warning of impending doom to the Canadian Auto industry. The previous 1965 AUTOPACT agreement had proven to be a Godsend for Canada and its replacement? Well who really knew how that would play out? Quite wonderfully actually. But now NAFTA is under attack and if our government cannot negotiate favourable terms our print industry could find itself back in the 1960s – shut out of tariff-free trade with our largest trading partner. For us in Canada? We can only hope that we don’t catch a cold.
Only a fool believes our large oil reserves serve a single purpose of providing energy and powering our vehicles. Oil is so much more important and used in everything from food to plastics. But paper is another story all together. Especially in coated cut sheet, Canada and America work somewhat differently. This can be seen by visiting any cross border print shop. Southeast Asian and Chinese paper suppliers enjoy a major slice of a Canadian printer’s buy. Not as much in America, where they have always been aggressive in slapping on anti-dumping and countervailing duties. With current zero duties on Canadian printed materials (to the U.S.), Trump could alter any perceived advantages save for our weaker dollar.
A bull in a china shop, Trump, while upending the way things have been, could either draw Canada closer economically or create huge difficulties. His reckless tweets and simplistic sound bites could not be more different from his predecessor. Obama’s speeches make Trump’s sound like he’s in a primary school debate. This does not change Trump’s forward trajectory as he stumbles through his first year.
America’s small business owners will, however, applaud him if he does make it easier for them to expand and run their businesses. The Environmental Protection Agency (EPA), for one, has made it extremely hard for web printers. The EPA imposes harsh rules for exhausting of airborne effluents and in some states like California the paperwork alone kills the majority of a dwindling industry.
Battles have not begun yet between the Republican majority Congress and the President. But they will. In two years, Congress has an election. A massive problem will unfold soon between the two for its possible that the GOP will (if they completely side with Trump) lose their majority and make Trump a lame duck. Congress representatives from States that do a lot of business with Canada will be hard pressed to support schemes that restrict trade between the two countries. Let the knives come out.
For the U.S. printing industry they hope Trump will not do anything really stupid to upend the economy. These folks are willing to hold their nose and pray that Trump stays on message to effect legislation that can benefit U.S. manufacturing. Canada’s printing industry needs a strong voice in Washington now more than ever. Do we have it? Time will tell. The one argument President Trump can make that will hold water is trade. The rest of his ideas are another matter but let’s hope it’s not too late to take the car keys back.
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