With the election of Donald Trump for the next president of USA, many asks what does it mean for the food and beverage industries? Here is what we think.
If we are to see Trump proposed policies happening it will mean tax cuts, trade tariffs and deregulation. He pledged to increase tariffs on goods imported from around the world by as much as 20% rising to 60% for China. It is widely expected this will trigger a trade war where EU and China will make similar steps towards US. It may not be as straight forward even with republican majority in the house and in the senate as there are fraction against tariffs in the republican party.
Saying that we in the food industry need to take this possibility very seriously.
Depending on exports to the USA and possibly exports to other nations or regions where the USA policy will impose more protection, the impact will vary from nation to nation and from business to business. Conversely, trade restrictions that safeguard domestic markets could make it easier to sell domestically. Less market competition is one effect of the trade war, which makes many people question how Donald Trump’s election as the next US president will impact their domestic food and beverage industries.
Tariffs and reduced competition are likely to result in higher overall food and beverage prices for consumers. The impact of these increases will be felt less in the developed world, where food expenditures account for a lower portion of income, than in developing nations, where food expenditures account for a larger portion of income. There may be opportunities to locally produce and sell food items that were previously imported, especially for developing nations. Trade routes and commodity prices will be impacted when large segments of global supply chains shift since that supply will need to be redirected. In addition to having an impact on food and drink, Trump’s protectionist policies would also lead to lower general activity, higher interest rates, and inflation. Many economies will see slower growth rates as a result.
Nowadays, the food and agriculture industries in many nations, including the USA, are making significant investments to lessen their adverse environmental effects. This is likely to continue at a lower pace, as Trump’s prior administration repealed 125 environmental regulations and procedures. Although his policies might potentially put pressure on environmental spending in a number of nations, it is hoped and expected that states like California would keep making investments in the environment.
